Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

NEW WRIT (BOROUGH OF ROCHDALE)

Motion made and Question proposed,
That Mr. Speaker do issue his Warrant to the Clerk of the Crown to make out a new Writ for the electing of a Member to serve in this present Parliament for Rochdale in the room of Lieut.-Colonel Wentworth Schofield. T.D., deceased.—[Mr. Heath.]

Mr. Ede: Has the right hon. Gentleman observed—I am quite sure he cannot have done—that the effect of moving this Writ today is that no person who is—

Mr. Speaker: If there is a matter of dispute about this Motion it will have to be deferred until the end of Questions.

Mr. Ede: Very good, Sir.

Motion, by leave, withdrawn.

TRADE AND NAVIGATION

Accounts ordered,
relating to Trade and Navigation of the United Kingdom for each month during the year 1958."—[Sir D. Eccles.]

Oral Answers to Questions — AGRICULTURE, FISHERIES AND FOOD

Cheese

Mr. Collins: asked the Minister of Agriculture, Fisheries and Food if he will make a statement regarding the future level of home cheese production and of cheese imports from the Dominions.

The Minister of Agriculture, Fisheries and Food (Mr. John Hare): Ample supplies of cheese are likely to be available. The precise quantities will depend on the assessment of market prospects in this country by home manufacturers and those in the exporting countries, having

regard to the supplies of milk available for manufacture.

Mr. Collins: I was rather hoping the right hon. Gentleman would signalise his first answer at the Box in his new capacity with a sensible reply. Is he aware that the present wholesale price of best English Cheddar is 1s. 2d. to 1s. 3d. per lb. and Dominion prices are even lower? Both are well below the cost of production and distribution, and a continuance of this situation will be disastrous alike to farmers and housewives. Will he consider the matter and let us know what plans his Department has for dealing with the situation?

Mr. Hare: Naturally, I will consider anything the hon. Member or any hon. Member has to put to me. Meanwhile, I hope he will join with me in exhorting people to eat more cheese. There is plenty of it, many varieties, and it is very good for them.

Food Prices

Mr. Dodds: asked the Minister of Agriculture, Fisheries and Food, in view of the recent substantial price reductions of foodstuffs imported to this country, what action the Government will take, by price control or otherwise, to ensure that in this respect there will be an easing of the burdens of consumers.

Mr. John Hare: I would refer the hon. Member to the reply given by my predecessor on 25th November to the hon. Member for West Ham, North (Mr. Lewis). Experience during 1957 has shown that the forces of competition can be relied on to translate reductions in import food prices into appropriate retail price reductions.

Mr. Dodds: Does not the Minister understand that he has missed the point? Is the Minister not aware that there have been substantial price reductions of imports in recent weeks, since the date he gave, and that wage increases have not affected them? Is he not aware that, if they really want to do something to keep the cost of living down, now is the time for the Government to take action and not to wait for a few months?

Mr. Hare: Whatever the hon. Member may say, I am sure that every hon. Member is aware that in the shops today flour is down by about ¾d. per lb., bacon by about 9d., cheese by 1s., and so on.

Mr. Willey: Whilst congratulating the right hon. Gentleman on his translation to a very responsible and difficult Ministry, may I beg him not to content himself by replying to Questions in the same terms as his predecessor employed, because that will not do? Does he realise that this is a cardinal, essential problem and that there is no correlation between the fall in import prices of foodstuffs and retail prices, and that so long as there is not that correlation this country will be prejudiced? We hope he will look al this seriously and see that the housewife gets the benefit of the fall in world prices.

Mr. Hare: I am grateful to the hon. Member for the very kind beginning of his supplementary question. I realise my responsibility in my present position to the housewife, as I am also Minister of Food.

Potatoes

Mr. Dodds: asked the Minister of Agriculture, Fisheries and Food if he will make a statement on the potato situation at present and the prospects for the future.

Sir F. Medlicott: asked the Minister of Agriculture, Fisheries and Food if he will make a statement in relation to the anticipated supplies of potatoes during 1958.

Mr. John Hare: Home-produced potatoes are at present supplying most of our needs but small quantities of potatoes are being imported, mainly from Belgium. Prices at all stages of distribution have remained at broadly the same level since the end of November. The Government hope that the home crop, supplemented by imports, will meet the needs of the market at reasonable prices until the 1958 early potato crop becomes available.

Mr. Dodds: Is the Minister aware that many people take a very dim view of the statement by the Chairman of the Potato Marketing Board that no imports of potatoes should have been allowed because there were plenty of potatoes in this country? Is he not aware that a statement like that, made despite the fact that in November the prices were rising sky-high because of the shortage suggests that the housewife was being unnecessarily fleeced? When does his

Department intend to do something to protect housewives?

Mr. Hare: The hon. Member is hardly fair. Whatever dim view he or anyone else may take of what the Chairman of the Potato Marketing Board may have said, the point is that we have brought in imports.

Mr. Kimball: asked the Minister of Agriculture, Fisheries and Food what representations he has had from the interests concerned that all imported potatoes be labelled in the shops as foreign produce; and what action he proposes to take in this matter.

The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. J. B. Godber): I have seen representations from one county branch of the National Farmers' Union. There can, however, be no reference to a standing committee under the Merchandise Marks Act unless there has been a formal application which substantially represents the interests of all potato producers. In the absence of such an application, there is no action that my right hon. Friend can take.

Mr. Kimball: Can my hon. Friend give an assurance that if he receives a proper representation he will treat this matter as urgent? The potato producers in my own part of the world have certainly adopted a very responsible attitude towards the import of potatoes, and this seems to be a very reasonable safeguard they are demanding, and demanding as soon as possible.

Mr. Godber: Yes, we will give it as urgent consideration as we can, but there are procedures laid down under the Merchandise Marks Act which would make it impossible for me to promise any speedy decision on this. But if the feeling among producers is as my hon. Friend says, then I am sure that they would do well to make proper representation on behalf of all producers.

Agriculture Act (Disciplinary Provisions)

Mr. J. Johnson: asked the Minister of Agriculture, Fisheries and Food if he is aware of the widespread dismay and apprehension throughout the farming community of Warwickshire following the Government's proposal to repeal Part II of the 1947 Act: and whether he will


conduct further negotiations with the National Farmers' Union regarding this matter.

Mr. Wiley: asked the Minister of Agriculture, Fisheries and Food whether he will make arrangements to receive further representations regarding the proposal for the total repeal of the disciplinary provisions of the Agriculture Act, 1947.

Mr. Lipton: asked the Minister of Agriculture, Fisheries and Food what protest he has had from the National Farmers' Union against the abandonment of the disciplinary powers in Part II of the Agriculture Act, 1947.

Mr. de Freitas: asked the Minister of Agriculture, Fisheries and Food what representations he has received against the Government's proposal to repeal the disciplinary provisions contained in Part II of the Agriculture Act, 1947.

Mr. John Hare: The future of the disciplinary provisions in Part II of the Agriculture Act, 1947, was one of the matters discussed in the talks held by my Department with representatives of the industry in the autumn of 1956, and their position was made clear on that and on subsequent occasions. Since the Government's acceptance of the recommendations in the Franks Report regarding the exercise of judicial functions by agricultural executive committees, and the announcement of its intention to repeal the disciplinary provisions of the 1947 Act. I have again been made aware of the views held by the N.F.U., the C.L.A. and the bodies representing agricultural workers. The Government's decision has been taken on the merits of the case in the full knowledge of those views. I am always willing to consider any representations that may be made to me, but, having done so, it must be then for the Government to use their own judgment in coming to a decision.

Mr. Johnson: Why does the Minister persist in this stubborn attitude against the wishes and considered views of the whole of the farming community, including not only farmers but farm workers, and, indeed, all inside the industry? Is he aware that while he makes an excellent photograph amongst his pigs—and I congratulate him on it—we should be grateful if he would kindly leave his pigsties

and go into the markets to see what the farmers are thinking and saying about this question?

Mr. Hare: I thank the hon. Member for the rather double-edged compliment. I assure him that I am making it my business as rapidly as I can to go around the country and to make the personal acquaintance of more farmers than perhaps I know at the moment. I can only repeat that it is up to the Government, having heard all representations, to do what they think is right in the interests of the country.

Mr. Grant-Ferris: is my hon. Friend aware that in going about our constituencies during the recent Recess many of us received little or no comment from farmers on the repeal of Part II of the Act? Is he aware that many farmers welcome it?

Mr. T. Williams: Is not the right hon. Member aware that the National Farmers' Union, the Country Landowners' Association and the Arton Wilson Committee were all hostile to the recommendation of the Franks Committee and that the recommendation ought, therefore, not unduly to influence the right hon. Gentleman in reaching his decision?

Mr. Hare: I can assure the right hon. Gentleman that I shall always listen to everything he says on these matters with great respect, but I can only repeat to him that it is up to the Government to take soundings of the views of all responsible bodies and then to make up their own mind.

Major Legge-Bourke: In warmly welcoming what my right hon. Friend has said today, may I ask him to pay particular attention to the opinion of the members of the agricultural executive committees, who are the people who have actively to implement Part II? Will he bear in mind that the majority of them are very much in favour of its abolition?

Mr. Hare: Certainly. I can assure my hon. and gallant Friend we realise that it is up to us to consider the views of all people, including the agricultural executive committees, the National Farmers' Union and all responsible bodies.

Mr. Willey: The other day the Minister expressed himself, I admit cautiously, as having an open mind. Will he carry that


a little further and give the House an assurance that he will meet all the agricultural interests before he personally takes any decision in this matter?

Mr. Hare: I have already said in answer to questions that I have considered a number of representations, and I am prepared to consider any representations which are made to me. I must repeat, however, that having heard these representations, which may be merely a repetition of those which have already been given to us, it is up to the Government to make up their own mind.

Mr. Lipton: What is the use of the right hon. Gentleman saying that he is prepared to consider any representations which may be made if he has already made up his mind to flout the unanimous opinion of the whole of the farming community? [HON. MEMBERS: "Oh."] Is he not aware that not even hon. Members opposite can quote one responsible farmer who is opposed to the policy of the National Farmers' Union in this matter?

Mr. Hare: The hon. Member is entitled to his own opinion, but he will have heard from the noises of disagreement in the House that not everyone shares his view.

Bread (Prices)

Mr. Willey: asked the Minister of Agriculture, Fisheries and Food whether he will take steps to secure a reduction in the price of bread, whether by the introduction of price control or other means.

Mr. John Hare: The alternative to present policy is compulsion. The Government do not believe this would have the result the hon. Member desires.

Mr. Willey: The right hon. Gentleman need not be so dogmatic. Will he institute an inquiry? We cannot understand why the price of bread should not fall in relation to the price of flour and wheat. If he says that he will not have compulsion, will he not at any rate let us have an inquiry and let us know what are the facts?

Mr. Hare: I do not think an inquiry will help matters very much. I am always willing to listen to constructive suggestions, but I would point out to the

hon. Member that, in general, the price of bread declined by about a halfpenny for a 1¾ lb. loaf from last June and that the price has been kept constant until now.

Fishing Industry (Committee of Inquiry)

Mr. Hector Hughes: asked the Minister of Agriculture, Fisheries and Food if he is aware that the terms of reference of the committee of inquiry into the fishing industry, which he has recently set up, are ambiguous; and if he will now make clear how far those terms of reference include not only the owners and workers in the catching side of the industry but also the owners, merchants, workers and transporters in the selling side of the Scottish fishing industry.

Mr. John Hare: I see no ambiguity in the Committee's terms of reference, which cover all sections of the United Kingdom industry concerned with either the catching or the marketing of fish.

Mr. Hughes: Will the Minister have another look at the terms of reference? Does he realise that the usefulness of this inquiry will be much diminished unless it is made perfectly clear that it is comprehensive and will apply to both the owners and the workers on every side of this rather versatile and wide industry?

Mr. Hare: The terms of reference are very brief, but they are very broad. I should like to read them—
To assess, in relation to developments in fishing and the marketing of fish, the size and pattern, and implications, of an economic fishing industry in the United Kingdom, and to report.
Those terms are as broad as they possibly could be.

Improvement Grants

Mr. Willey: asked the Minister of Agriculture, Fisheries and Food how many grants have been approved in respect of improvements under the Agriculture Act, 1957, and at what estimated cost; and how many applications have been received.

Mr. Donnelly: asked the Minister of Agriculture, Fisheries and Food if he will state the number of applications he has received for improvement grants


under the Agriculture Act, 1957; the number his Department has inspected; and the number he has approved.

Mr. Lipton: asked the Minister of Agriculture, Fisheries and Food if he will state the number and value of the applications received and approved for farm improvement grants.

Sir A. V. Harvey: asked the Minister of Agriculture, Fisheries and Food what total sum has been approved in the form of capital grants to farmers at the latest convenient date.

Mr. de Freitas: asked the Minister of Agriculture, Fisheries and Food what proportion of the applications for agricultural improvement grants has been approved.

Mr. John Hare: Up to the end of December, 19,302 applications had been received in England and Wales in respect of improvements estimated to cost about £12½ million. Formal approval had been given to 3,841 applications, about 20 per cent. of the total, at an estimated cost of about £2,900,000 attracting grants of nearly £1 million. In addition, 4,069 applications, or 21 per cent., were ready for approval, subject to the applicants providing satisfactory plans, specifications or tenders or signing formal documents, and a further 2,957, or 15 per cent., had been inspected, 2,811 had been rejected or withdrawn.

Mr. Willey: The House is very much obliged to the right hon. Gentleman for the information he has given us. Could he indicate what the effect of the Government's credit policy has been upon these applications? Can he say whether the pattern of applications has been affected and whether any particular category of farmer has been prejudiced?

Mr. Hare: I should like to look at that. As far as I can say, giving a spot answer, there has been no effect on the lines which the hon. Member may have in mind.

Sir A. V. Harvey: Can my right hon. Friend say how much he expects his Department to spend in this direction in the first 12 months? Will he make known to the House at some time, if not today, to what extent the small farmers are participating in the grants?

Mr. Hare: I will certainly bear in mind what my hon. Friend has said. If

he cares to put down a Question on the subject, I shall be glad to give him an answer.

Mr. T. Williams: Can the Minister give any idea how many of these schemes have actually been started?

Mr. Hare: I cannot give the right hon. Gentleman an answer to that, but I will find out and let him know all I can.

Mr. Lipton: Is it not a fact that the percentage of rejections is disturbingly high, and will he say whether or not these rejections are, to a disproportionate extent, being made to apply to the small farmer; and will he give an assurance that the scheme is not being used to put the small farmer out of business altogether?

Mr. Hare: I think it is almost ridiculous to ask me to reply to the last part of the hon. Gentleman's supplementary, but, in fairness to him, I think that when he reads my reply he will see that amongst the rejections are a number of people who have withdrawn their applications, and I would like him, if he would, just to digest my reply.

Mr. de Freitas: Does not the general administration of the scheme discriminate, in fact, against the small farmer and result in the larger farmer, who often does not really need them, getting these grants?

Mr. Hare: No, I do not think that it does. I know that the House will agree that this is public money that we are spending, and that we have to act as a prudent landlord in these matters.

Horticultural Marketing (Report)

Colonel Beamish: asked the Minister of Agriculture, Fisheries and Food if he will now make a statement of the Government's intentions, arising from the recommendations of the Runciman Committee on horticultural marketing.

Mr. John Hare: I hope to be in a position to make a statement within the next few weeks.

Compound feeding-stuffs

Mr. Philips Price: asked the Minister of Agriculture, Fisheries and Food what percentage, on the average, of the cubes and cakes purchased by farmers for


their dairy and feeding stock from manufacturers and port millers is from home-grown ingredients and what percentage is imported from overseas.

Mr. Godber: In the cereal year 1956–57, about 25 per cent. of all manufactured compound feeding-stuffs produced in Great Britain consisted of home-grown materials, the other materials being imported.

Mr. Philips Price: Does not the hon. Gentleman think that the present percentage of imported ingredients for feeding-stuffs is a strain on our balance of payments position abroad?

Mr. Godber: We would certainly welcome a larger proportion of home-grown ingredients, but in order to put it into perspective, I think it is fair to say that these figures relate to compound mixtures and that large quantities of home-grown feeding-stuffs are produced and consumed on the farms, and do not, of course, appear in the figures.

Oral Answers to Questions — NORTHERN RHODESIA

Copper Mining Areas (Housing)

Sir L. Plummer: asked the Secretary of State for the Colonies what schemes have been introduced in the copper mining areas of Northern Rhodesia for voluntary home ownership to assist Europeans to own and live in their own houses outside the mine townships.

The Under-Secretary of State for the Colonies (Mr. Profumo): The mining companies allow European employees to draw for house purchase upon savings accumulated under the Copper Bonus Scheme. They pay those living in their own private houses an allowance of £30 a month. Mine employees are eligible for a 90 per cent. building society loan under the General Territorial Scheme sponsored by Government if the value of the house is not more than £3,500.

Sir L. Plummer: Would the Under-Secretary recommend to the Government of Northern Rhodesia that these excellent schemes should not be prosecuted at the expense of African townships?

Mr. Profumo: I do not think there is any need to make that recommendation.

Townships (Survey)

Sir L. Plummer: asked the Secretary of State for the Colonies what is the number of new township stands which have been surveyed by the Government of Northern Rhodesia on Crown Lands; and to what extent layouts for African townships have also been surveyed.

Mr. Profumo: During 1956, 2,132 stands were surveyed in African townships and 2,460 (including residential, commercial and industrial stands) in general townships; for the first nine months of this year, the figures are 841 and 1,463, respectively.

Sir L. Plummer: Is it not also the fact that only three African townships have been surveyed? If that is so, is it not because there is a shortage of surveyors, and could not they be provided from this country to carry on this work?

Mr. Profumo: I would like to look into that latter suggestion of the hon. Member.

Oral Answers to Questions — CYPRUS

Prisoners (Transfer to United Kingdom)

Miss Lee: asked the Secretary of State for the Colonies on what grounds certain prisoners in Cyprus are transferred to this country to serve considerable periods of their sentences; on what evidence this selection is made; and what remission of sentence is given to compensate for the loss of opportunities of visits from their relatives.

The Secretary of State for the Colonies (Mr. Lennox-Boyd): The prisoners were brought here under the Colonial Prisoners Removal Act of 1884 for their safer custody, and for carrying their sentences into effect more efficiently. The removals were ordered in each case after consideration of a report by the Governor of Cyprus. As regards the third part of the Question, no specific remission is given on this account. I am, however, bringing this matter to the attention of the Governor of Cyprus, who has responsibility for the review of sentences and who will no doubt bear this factor in mind.

Future

Mr. K. Robinson: asked the Secretary of State for the Colonies if he will now enter into discussions with representatives of the Cypriot people on the future status of the island; and if he will make a further statement.

Mr. Brockway: asked the Secretary of State for the Colonies if he will make a statement on developments in, and related to, Cyprus.

Mr. P. Williams: asked the Secretary of State for the Colonies whether he will make a statement about the future of Cyprus.

Mrs. L. Jeger: asked the Secretary of State for the Colonies if he will now make a further statement on the constitutional future of Cyprus.

Mr. Callaghan: asked the Secretary of State for the Colonies if he will make a statement on the recent visit of the Governor of Cyprus to London.

Mr. Wall: asked the Secretary of State for the Colonies whether he will now make a further statement on the future of Cyprus.

Mr. Donnelly: asked the Secretary of State for the Colonies if he will make a new statement regarding Her Majesty's Government's policy towards Cyprus.

Mr. Lennox-Boyd: During his recent visit to London, the Governor made a report to Her Majesty's Government and took part in discussions on it at which, to use his own words, there was full agreement all the way between himself and Her Majesty's Government. As I indicated in my reply to Questions on 21st January, I am not yet in a position to make any statement on future policy, but I readily assure the House that I will make one at the first appropriate opportunity.

Mr. Robinson: Is the right hon. Gentleman aware, first of all, how much those of us on this side and, I hope, on the other side as well, appreciate the way in which the new Governor has transformed the political atmosphere in Cyprus in the matter of a few weeks? Is he also aware how disappointing this reply is? Does he really intend to match Sir Hugh Foot's courage and efficiency with a continuance of the present Government's policy of

inertia and wait until a return of despair brings renewed violence to the island before acting?

Mr. Lennox-Boyd: With regard to the first part of the hon. Gentleman's supplementary, I entirely agree that we are ail in the debt of the new Governor of Cyprus, who would himself be the first to say how much we also owe to Field Marshal Sir John Harding. In regard to the second part, I do not think it will help the cause we all have at heart if I engage in a minor debate at this stage.

Mr. Williams: Would not my right hon. Friend agree that it has been historically the duty of British colonial rule to try to reconcile the interests of various races in any particular territory; and, in that theme, would he not agree that it might be appropriate to try to impose the Radcliffe Constitution? Has he any proposition or thoughts on the imposition of the Radcliffe Constitution in the near future?

Mr. Lennox-Boyd: I think the same considerations that I mentioned in answering the second part of the supplementary put by the hon. Member for St. Pancras, North (Mr. K. Robinson) really apply to my hon. Friend.

Mr. Callaghan: Whilst we are awaiting the new Government initiative, which we on these benches have pressed for since the release of the Archbishop last April, may I ask the Colonial Secretary if he will convey to the people in Cyprus that it is the view, I hope, of all of us in the House—and certainly on this side—that any recurrence of violence, whether conducted by the Turks or by E.O.K.A., can only set back the future settlement of the island?

Mr. Lennox-Boyd: Certainly, Sir. I think that we will all join in what some Greek Cypriots are saying, "Down with masked men."

Mr. Brockway: In view of the high hopes raised by Sir Hugh Foot's courageous and imaginative action since he has been the Governor, and in view of the deteriorating state of the island of Cyprus now, will the right hon. Gentleman take the earliest opportunity to announce Government policy, so that disillusionment may not turn into despair?

Mr. Lennox-Boyd: I have nothing to add to my Answer.

Oral Answers to Questions — COLONIAL TERRITORIES

Political Rights of Women

Miss Burton: asked the Secretary of State for the Colonies which were the Colonial Territories he consulted concerning the political position of women, in so far as this was relevant to the inability of Her Majesty's Government to ratify the Convention on the Political Rights of Women during the sitting of the Assembly of the United Nations; and what were the results of his discussions.

Mrs. Emmet: asked the Secretary of State for the Colonies the results of the inquiries he has made in British Dependent Territories regarding the political disabilities of women in these territories which prevent Her Majesty's Government ratifying the Convention on the Political Rights of Women at the United Nations; and what steps are being taken to draw the attention of interested Governments in these countries to these disabilities.

Mr. Profumo: My right hon. Friend asked the Governments of all the territories for which he is responsible whether they were willing to accept this Convention. I am circulating a summary of their replies in the OFFICIAL REPORT. My right hon. Friend is considering the obstacles which prevent particular territories from accepting the Convention, but I should make it clear that, in the absence of a "colonial application article", it will be necessary, in addition to the United Kingdom itself, for every territory for whose international relations the United Kingdom is responsible to be ready to accept the Convention before Her Majesty's Government can ratify it. Progress is continually being made towards the objectives of the Convention, but, allowing for factors such as the hold of native custom in some territories, I could not predict when ratification may be possible.

Miss Burton: Is the Under-Secretary aware that this matter seems to have dragged on for a very long time? Practically a year ago we were told that these inquiries were being made. Is he able to give us any idea at all, in spite of his last sentence, as to how long matters will take before we make any real progress?

Mr. Profumo: No, Sir; I am afraid that I cannot give any undertaking. As I said, the trouble really arises from there not being a colonial application clause, in spite of what my hon. Friend the Member for East Grinstead (Mrs. Emmet) did when she attended the Convention herself.

Following is the summary of the replies:

(1) 11 territories could accept the Convention. Montserrat, Grenada, St. Kitts, Virgin Islands, British Honduras, Tanganyika, Gambia, Sarawak, Mauritius, Jamaica and the Turks and Caicos Islands.
(2) 13 territories could accept Articles I and II but not Article III. Gibraltar, Hong Kong, Singapore, Malta, Bermuda, Dominica, St. Vincent, Barbados, St. Lucia, British Guiana, Seychelles, Falkland Islands, Antigua. Two common reasons are the absence of equal pay in the Civil Service and the non-eligibility of women for jury service. There are also in some territories marriage bars or other measures of discrimination in branches of the Civil Service.
(3) 7 territories could not accept Article I (or I and II). In Aden, Uganda and Fiji there are at present no votes for women, and in Nigeria no votes for women in the Northern Region. Sierra Leone has different qualifications for male and female electors. In Kenya there is no vote for Arab women and different qualifications for African women and men.
(4) 2 territories (Zanzibar and Bahamas) could not accept any Article.
(5) Six territories (Tonga, North Borneo, New Hebrides, Western Pacific, Somaliland. St Helena) have not sufficiently developed institutions for the Convention to apply to them although there is no actual legal objection.

I have not yet had replies from the remaining territories.

Uranium Deposits

Mr. Russell: asked the Secretary of State for the Colonies what encouragement is given to prospectors and geologists in Colonial Territories to look out for uranium deposits when surveying or searching for other materials.

Mr. Profumo: Prospecting for uranium is encouraged in a number of ways, details of which I will, with permission, circulate in the OFFICIAL REPORT.

Following are the details:

1. Guarantee to mining companies

As regards Northern Rhodesia and Nyasaland the U.K. Atomic Energy Authority has given a guarantee to mining companies operating in the Federation of Rhodesia and Nyasaland to purchase uranium concentrates


up to an annual total of 500 tons under ten-year contracts up to 1972, at prices which will be reasonable in the light of world conditions at the time. A separate offer has been made to mining companies in Kenya, Uganda, Tanganyika, Swaziland and British Guiana up to a similar amount of 500 tons.

2. Small lots offer

An offer has been made to small producers in Northern Rhodesia and Nyasaland under which the Authority guarantee to accept small lots of uranium concentrates up to an annual total of 100 tons over a seven-year period from March, 1957.

3. Local offices

The Authority have set up offices at Salisbury (Southern Rhodesia) and Dodoma (Tanganyika) to give technical advice and assistance and to stimulate the search for uranium in Central and East Africa. They propose to set up a similar office in British Guiana.

4. Equipment

The Authority is loaning free of charge radiometric equipment to the Geological Survey Departments in a number of Colonial territories.

5. Visit of geologists

There are frequent visits to colonial territories by geologists on behalf of the Atomic Energy Authority.

International Labour Conference (Conventions)

Mr. D. Jones: asked the Secretary of State for the Colonies whether he is now able to make a statement about the intentions of the Government respecting the implementation of Convention No. 84 adopted by the 30th Session of the International Labour Conference in 1947; and whether the provisions of the conventions referred, to can now be applied to the non-metropolitan territories reserved by Command Paper No. 7865 of January, 1950.

Mr. Profumo: As stated in Cmd. 7865, Convention No. 84 was applied in 1950 to all but three of the non-metropolitan territories for which the United Kingdom is responsible. The Convention is now fully complied with in two of these, and the necessary legislation is under consideration in the third. The further application of the other conventions referred to in the same White Paper will be kept under review.

Mr. Jones: Surely the Minister recognises that, after a lapse of nearly eight years—it is more than ten years since the Convention was passed by the I.L.O.—it ought now to be possible to apply

this quite modest Convention to the territories which are still reserved.

Mr. Profumo: if the hon. Member is referring to the Convention he mentions in his Question, as I have already told him, there is only one which is now still under consideration.

Mr. Callaghan: How would the ratification of this Convention affect the situation in the Bahamas, from where information is coming in that the situation is worsening because of the strike there? Will the hon. Gentleman or the Colonial Secretary consider making a statement next week on the situation in the Bahamas?

Mr. Profumo: With regard to the first part of that question, Convention No. 84 does apply to the Bahamas.

Geologists

Mr. Sydney Irving: asked the Secretary of State for the Colonies the number of geologists employed in Government service in the Colonies; how many of these are engaged in prospecting for radioactive ores or associated projects; and how many of these are employed in Northern Rhodesia and Nyasaland.

Mr. Profumo: One hundred and eighty-two, of whom eight are employed in Northern Rhodesia and seven in Nyasaland. They are not usually engaged solely or primarily in prospecting for radioactive ores.

Mr. Irving: Does this not confirm the view expressed by a contributor in The Times Colonial Review that this was a "man and boy" approach to exploration in the Colonies? As the view was also expressed that a similar effort as has been given in America, Canada or South Africa could produce a similar result, does this not indicate a terrible failure to exploit our colonial resources? To what extent are the mining licences given to business houses in other types of mining holding up this development?

Mr. Profumo: I do not think the development is being held up at all. I know the article to which the hon. Member refers, but I cannot agree with its conclusions. The situation in Canada is different from that obtaining in Africa, and I am confident, as is my right hon. Friend, that everything is being done in this important matter.

Mr. Usborne: If the news we hear of the Zeta rector is correct, is it not a fact that these radioactive ores for which we have lately been prospecting may in the near future be found not to be so very important?

Mr. Profumo: In the case brought forward by the hon. Gentleman, I agree that this is a very important matter.

Mr. Sydney Irving: asked the Secretary of State for the Colonies what steps he is taking to encourage the training and recruitment of geologists for work in the Colonies in the locating of deposits of radioactive ore.

Mr. Profumo: Trained geologists are recruited from the universities for the Colonial Geological Survey Departments, which do this work. May I also draw the hon. Member's attention to my reply to my hon. Friend the Member for Wembley, South (Mr. Russell)?

Mr. Irving: While thanking the Minister for that reply, in view of the shortage of geologists, may I ask what encouragement he proposes to give to the establishment of a department of geology in the University College of Nyasaland and Rhodesia?

Mr. Profumo: That is another question. If the hon. Member puts it down, I will try to answer it.

Mr. Sydney Irving: asked the Secretary of State for the Colonies what steps he is taking to make use of the services of geologists on the staffs of British universities for research and tuition during their long vacation; and what encouragement he is giving to senior students to take on holiday employment in the Colonies.

Mr. Profumo: University lecturers and senior students have where appropriate been given assistance and facilities for visiting Colonial Territories. My right hon. Friend's Geological Adviser keeps in close touch with the universities on these matters.

Mr. Irving: Does not the fact that more students and full-time staff are engaged by the Geological Survey of Greenland than in all the Colonies we control indicate that not enough is being done? Is the hon. Gentleman aware that remunerative vacation employment can be

got for students in Canada but not at all in Africa?

Mr. Profumo: I have answered the last point of the hon. Member's question in an earlier supplementary. The geological departments at Oxford and Bristol Universities have, for historical reasons, a special connection with Greenland.

Oral Answers to Questions — SIERRA LEONE

Constitution

Mr. Brockway: asked the Secretary of State for the Colonies if he will make a statement on proposed constitutional changes in Sierra Leone.

Mr. Lennox-Boyd: I have nothing to add to the Answer given to the hon. Member for Rugby (Mr. J. Johnson) and the hon. and learned Member for Aberdeen, North (Mr. Hector Hughes) on Tuesday, 21st January.

Mr. Brockway: Does the right hon. Gentleman appreciate that this is an occasion when one can congratulate him and the members of the Sierra Leone delegation who were engaged in these negotiations?

Mr. Lennox-Boyd: I thank the hon. Gentleman very much.

Assistance and Development

Mr. Hector Hughes: asked the Secretary of State for the Colonies what representations he has had from the Sierra Leone Government as to their financial and other problems; and what contribution he has made, or intends to make, to their solution.

Mr. Lennox-Boyd: The Sierra Leone Government have not sought my help in financial matters. I am, of course, in continuous touch with them on all problems on which my help may be of value.

Mr. Hughes: Have the Government of Sierra Leone not approached the Secretary of State concerning a study of their problems, which are growing in urgency? Will the right hon. Gentleman expedite a solution of them?

Mr. Lennox-Boyd: We are in continual touch and on the best of terms.

Oral Answers to Questions — MALTA

Situation

Mr. Brockway: asked the Secretary of State for the Colonies if he will make a statement on the discussions with the Government of Malta regarding the integration of the Colony with Great Britain and the guarantee of employment to the dockyard workers.

Mr. P. Williams: asked the Secretary of State for the Colonies whether he will make a statement on his discussions over the future of Malta.

Mrs. L. Jeger: asked the Secretary of State for the Colonies when he anticipates bringing legislation before the House to change the constitutional position of Malta.

Mr. Wall: asked the Secretary of State for the Colonies whether the recent resolution of the Maltese Parliament in certain circumstances to sever all ties with Great Britain has now been fully withdrawn; and to what extent this resolution has affected the proposals for the integration of the two countries.

Mr. Lennox-Boyd: When Mr. Mintoff left London in November, there were certain points outstanding in our discussions on the future Constitution, on which I subsequently wrote to him. He had then been informed that no decision had been taken about the future of the Admiralty dockyard in Malta. Despite assurances which I sent him on 29th November about maintaining the level of activity in the dockyard for the next three years, Mr. Mintoff persisted in demanding a guarantee, which Her Majesty's Government had already made clear they could not give, that any redundancy in Services' employment must immediately be met by provision of an alternative job.
On 30th December, Mr. Mintoff tabled a Motion in the Maltese Legislative Assembly denouncing obligations assumed on behalf of Malta towards Britain and her allies until such a guarantee were given. This Resolution was passed unanimously and has not been rescinded. The House will, however, see from the subsequent exchange of published messages between Mr. Mintoff and myself, copies of which I am placing in the Library, that the Maltese Government

now consider that the situation "does not call for the implementation of the Resolution".
I am now in private correspondence with Mr. Mintoff about the other points made in his last published message. I have not yet had his reply to my letter on outstanding constitutional points. Meanwhile, I am not in a position to forecast the introduction of legislation.

Mr. Brockway: Is not the present situation due to long procrastination in negotiations between Her Majesty's Government and the Government of Malta? Is it not the case that many months ago the principle of integration was endorsed, including promises which would cover work and the conditions of labour? Will not the right hon. Gentlemen speed a conclusion to these long-delayed negotiations so that we may welcome members from Malta in this House?

Hon. Members: No.

Mr. Lennox-Boyd: The hon. Gentleman would do well to read the correspondence I am placing in the Library. In regard to the first and second parts of his supplementary question, if he really believes that—in the famous words—he would believe anything.

Mr. Pickthorn: Has it been explained to Mr. Mintoff that, so long as the resolution is on the record, the word "integration" is wholly irrelevant to the Maltese affair?

Mr. Lennox-Boyd: It has, I think, been made perfectly clear that the presence of this resolution on the order paper and its failure to be rescinded do not—to put it mildly—help the cause of integration.

Mr. Paget: Was it not a little refreshing to find that a Colony actually wanted to get closer—

Mr. Pickthorn: It actually does not.

Mr. Paget: —and is it not rather sad that the opportunity has been frittered away over financial terms much more trivial than £50 million?

Mr. Lennox-Boyd: I do not believe that the hon. and learned Member for Northampton (Mr. Paget) would be right in saying that there has been a lack of


imagination or drive on the part of Her Majesty's Government in their dealings with Malta over the last two years. But the continued poising in the air, so to speak, of this resolution of 30th December leads me to the conclusion that, perhaps, the full implications of integration have not been wholly understood, as yet, by the Maltese Government and people.

Mr. Williams: While agreeing with my right hon. Friend that the resolution passed by the Malta Parliament was one of the most irresponsible which could possibly be passed in relation to the issue of integration. I should like to ask him to say a little more about the possible use of the dockyard in Malta by civilian companies.

Mr. Lennox-Boyd: We are very keen indeed to ensure that, and active steps are being taken, of which the Prime Minister of Malta is being kept fully informed.

Mr. Callaghan: When the question of integration is being considered, will the Colonial Secretary ask some of his hon. Friends to reflect upon the consequences of the alternative to integration before they make up their minds?

Hon. Members: What are they?

Mr. Callaghan: Hon. Gentlemen should think them out. Perhaps they will not be so pleasant.
Will the Colonial Secretary now really try to bring these negotiations, especially on the financial side, to a speedy conclusion? Are not two years long enough for the matter to be held up?

Mr. Lennox-Boyd: I have never disguised my belief that the policy of integration is the best for Malta and, in the long run, for the United Kingdom. I therefore deplore actions which prejudice the successful accomplishment of this aim. In regard to the second part of the hon. Gentleman's supplementary, there has been no delay on the part of Her Majesty's Government. I am at all times ready to discuss, when appropriate, outstanding matters, but I cannot accept the obligation that Her Majesty's Government should re-employ—man for man—anyone who finds himself redundant as a result of defence cuts which will also seriously affect the United Kingdom.

Sir P. Agnew: Before making up his mind on the point and coming to a decision, will my right hon. Friend take note of the fact that there is a growing body of public opinion in this country, made aware of the integration scheme for the first time by recent events, which is utterly averse to people from a Mediterranean civilisation, however worthy they may be, taking part on equal terms in this House in the decisions of our Parliament?

Mr. Lennox-Boyd: This matter was, of course, debated at length in the House some time ago, and there will be other opportunities for all hon. Gentlemen to make their own views clear. At the moment, all I can say is that the continued presence of that particular resolution hardly conduces to a favourable atmosphere.

Mr. Callaghan: Are we to assume from the last supplementary question that these islanders, who were good enough to be bombed during the war in order to provide a British base of which we were all glad to take considerable advantage, are not now good enough to share our suffrage?

Mrs. Jeger: In view of the fact that the Gracious Speech foreshadowed legislation during the current Session, will the right hon. Gentleman say whether it is his intention to bring forward legislation during the present Session? Further, does he think that it would help to get out of this impasse if he were once more to invite the Prime Minister to come to London and really try to sort out the present difficulties?

Mr. Lennox-Boyd: We were certainly hoping that our negotiations would end in agreement, but the proposed time-table for publication of the White Paper on integration and the introduction of legislation may now, for obvious reasons, require revision.

Mr. Wall: Is my right hon. Friend aware that there is still a great fund of good will towards Malta in this country, but is it not also true that integration carries responsibilities as well as privileges? Will my right hon. Friend make that quite clear to the Prime Minister of Malta?

Mr. Lennox-Boyd: Yes, Sir. That is exactly what I have been trying to do—and in this House today.

Oral Answers to Questions — KENYA

Entry Permit (Sheik Ali Muhsin Barwany)

Mr. J. Johnson: asked the Secretary of State for the Colonies whether he is aware that Sheik Ali Muhsin Barwany, a member of the Zanzibar Executive Council, was turned back from Nairobi while on his way to the Afro-Asian Conference in Cairo, and declared a prohibited immigrant; and whether he will reconsider this decision.

Mr. Profumo: I am aware of these facts; I now understand, however, that Sheik Ali Muhsin Barwany is no longer a prohibited immigrant and is free to travel to or through Kenya if his travel documents are in order.

Mr. Johnson: Is the Minister fully aware how fatuous these decisions appear to liberal eyes outside our territories? Is he further aware that Mr. Basil Davidson, a well-known journalist, was also barred entry to Kenya? Does the Minister agree that these decisions—and they are happening in the Central African Federation too—are turning us towards what people call Afrikaaner ideas in this matter? Will he not think again about it?

Mr. Profumo: I will not think again about it. I cannot give that undertaking. The conference to which the Sheik was going was largely Communist-inspired and influenced, as results have shown. These are matters for judgment in each case. I cannot think that attendance on the occasion in question would have served the interests of the people of Zanzibar.

Oral Answers to Questions — OVERSEAS CIVIL SERVICE (EX-REGULAR OFFICERS)

Mr. Hector Hughes: asked the Secretary of State for the Colonies how many officers recently retired from Her Majesty's Forces have been given appointments in Her Majesty's Overseas Civil Service during each of the last five years; what are their educational and other qualifications for such appointments; how these qualifications are tested; to what Colonies they have been appointed, respectively; and with what results.

Mr. Lennox-Boyd: I am afraid that it would not be possible to give these figures without a very great deal of research, but such appointments have not been numerous.

Mr. Hughes: Does the Secretary of State not realise that the qualifications for Her Majesty's Colonial Service are not necessarily the same as those for the Fighting Services? Will the right hon. Gentleman take care to ensure that officers are not appointed to the Colonial Service merely because of their military service, so that officers in the Colonial Service may have the appropriate qualifications? In asking this supplementary, I am making no reflection on either service.

Mr. Lennox-Boyd: Officers from the Armed Forces, who are very few in number, are, of course, appointed because they qualify. Those I have seen seem to me to be admirably qualified.

Oral Answers to Questions — PARLIAMENTARY PROCEDURE

Viscount Hinchingbrooke: asked the Prime Minister whether he will move to appoint a Select Committee on Procedure to examine and report upon Lord Campion's proposals for a more effective control of Supply by this House and, in particular, for a more detailed review of expenditure in its financial aspects and for a more suitable form of raising grievances before voting Supply, upon the processes of legislation by Public Bill both in Committee upstairs and on the Floor of this House in relation to the procedure now adopted for the consideration of Statutory Rules and Orders, upon proxy voting and other matters which may be referred to the Select Committee for the better exercise of the Parliamentary function.

The Secretary of State for the Home Department and Lord Privy Seal (Mr. R. A. Butler): I have been asked to reply.
Lord Campion's proposals were fully considered by the Select Committee on Procedure of 1945–46 for which they were prepared. Certain of the proposals were rejected by die Committee and certain were accepted, and some have since been put into effect. I do not think there is any call yet for further consideration of the proposals by a Select Committee.

Viscount Hinchingbrooke: Have the correspondence and the leading articles and turn-over articles in The Times been brought to the notice of my right hon. Friend during the Recess? Have they made no impression on him whatever? Are the Government not prepared to make a more considered and more forthcoming statement to the House when the matter of the procedure of Parliament happens to be raised by an hon. Member opposite on 31st January?

Mr. Butler: Yes, Sir, I was deeply affected by the letter of my noble Friend. For the sake of greater accuracy, I have a copy of it with me. I fully realise the importance of the procedure of the House of Commons and the public interest in it, but it so happens that in answering my noble Friend's Question I attempted to answer the points he raised, and I would not have thought that he would wish to limit the reform of procedure to those points. In so far as those points are concerned, however, they have been already considered.

Mr. Shinwell: Does the right hon. Gentleman not consider that the time has arrived for at least the appointment of a Select Committee to consider a complete revision of the procedure of the House? Does he not recognise that a great deal of time is wasted, that the time of Members is often wasted—they often have nothing to do—and that a great deal of work that is undertaken by the House itself could be referred to appropriate Committees? Even the matter of Questions could be referred to appropriate Committees. Surely, the time has arrived when we ought to bring ourselves up to date.

Mr. Butler: In answer to the right hon. Gentleman's Supplementary Question, and again in answer to my noble Friend, I certainly would be quite ready as Leader of the House to consider any constructive proposals relating to the procedure of the House. In answering my noble Friend I was answering a specific point. In general, I think we ought to keep our minds open.

Oral Answers to Questions — NON-AGGRESSION PACT

Mr. Zilliacus: asked the Prime Minister (1) whether he will propose that the Powers signing the nonaggression pact he has offered the Union

of Soviet Socialist Republics should undertake to suspend thermonuclear weapon tests, subject only to the establishment of inspection posts, pending agreement on other aspects of disarmament;
(2) whether he will propose, as part of the non-aggression pact offered to the Union of Soviet Socialist Republics, that the parties to the pact should refrain from establishing nuclear weapon bases in the territories, or providing nuclear weapons to the forces of Germany and the European People's Democracies, or to forces stationed in their territories;
(3) whether he will propose that the Powers signing the non-aggression pact should negotiate a European settlement on the basis of unifying Germany by democratic means within the United Nations and an all-European treaty implementing the Charter, but outside the rival alliances, and accompanied by an agreement to reduce, limit and control armaments and progressively to thin out and withdraw all foreign forces from the territories of Germany and her neighbours.

Mr. R. A. Butler: I have been asked to reply.
These three Questions are closely related to the proposals in Mr. Bulganin's letter of 8th January and, as I informed the House on 21st January, the Prime Minister will be replying in due course to this letter. I have, therefore, nothing further to add at present.

Mr. Zilliacus: Does not the right hon. Gentleman agree that when offering a non-aggression pact—to quote the Prime Minister—"words should be followed by deeds", and that it is inappropriate that we should offer a non-aggression treaty and at the same time introduce nuclear weapons where they do not exist, thereby aggravating the situation? Is it not appropriate, in offering a non-aggression treaty, to renounce the idea of trying to bring Germany into the Western alliance and to get some basis on which negotiations are possible?

Mr. Butler: I am afraid that the hon. Member has brought so many different considerations into his supplementary question that it would be wrong of me to answer them in detail. I would only ask the House to await the considered reply which my right hon. Friend is sending to Mr. Bulganin.

Mr. Pickthorn: Will my right hon. Friend consider whether it is necessary to remind, if not the Prime Minister, at least Mr. Bulganin, of the declaration by the Prime Minister—I think it was last June—following all his predecessors in authority in this country and in the United States, of the necessity in any non-aggression pact of avoiding implicit de jure recognition of the Russian occupation of East Europe?

Mr. Butler: I feel sure that my right hon. Friend will be aware of that, and I will certainly bring to his attention the need of seeing that Mr. Bulganin is aware of that.

Oral Answers to Questions — ECONOMIC SECRETARY TO THE TREASURY

Mr. Cronin: asked the Prime Minister when he proposes to appoint an Economic Secretary to the Treasury.

Mr. Lewis: asked the Prime Minister whether he will make a statement on the recent Ministerial changes and the reasons for such changes; and whether he will announce the appointment of a successor to the office of Economic Secretary to the Treasury.

Mr. R. A. Butler: I have been asked to reply.
My right hon. Friend has nothing to add to the correspondence which has been published. As the Paymaster-General will assist the Chancellor of the Exchequer in dealing with economic affairs, it is not proposed to appoint an Economic Secretary for the present.

Mr. Cronin: Does not the continued vacancy of the office of Economic Secretary suggest that the Prime Minister does not think any of his hon. Friends have enough ability to fill it? If that is not the case, why is the country being deprived of the services of an Economic Secretary?

Mr. Butler: My right hon. Friend is so much impressed by the ability of the Paymaster-General that he does not think it necessary to fill the job.

Oral Answers to Questions — HYDROGEN BOMB TESTS

Mrs. Butler: asked the Prime Minister whether, in view of recent evidence, particulars of which have been communi-

cated to him by the hon. Member for Wood Green, regarding the danger to, health of fall-out from previous hydrogen bomb tests, he will now agree to suspend any further hydrogen bomb tests by this country.

Mr. R. A. Butler: I have been asked to reply.
No, Sir. I am advised that the figures, of strontium 90 in the cutting sent me by the hon. Member were estimates made during the United States Congressional Hearings last July of levels in human bone which might be reached in the United States if bomb tests were continued for a number of years. Even if these levels were eventually reached they would not be more than a small fraction of the level of 100 units which the reports of the Medical Research Council and of the United States Academy of Sciences regarded as the maximum permissible level for the population as a whole.

Mrs. Butler: In view of the fact that the report in the Lancet indicates that 10 units may be extremely dangerous from the point of view of skeletal concentrations of Strontium 90, and of the fact that there is no threshold below which no damage is done genetically by man-made radiation, and of the doubt there is in the matter, is it not imperative that the Government should seek to protect the health of the people of this country, particularly of the children, by abandoning any further nuclear weapon tests while seeking to get international agreement on the ending of tests?

Mr. Butler: I am informed that any extra evidence that we can get will be, as is the evidence we get regularly, closely studied by the Medical Research Council in conjunction with the Report prepared by the United Nations Scientific Committee on Radiation. I cannot anticipate the findings of this report, but as far as I can see the general trend of the evidence is in line with the conclusion in the Medical Research Council's Report.

Mr. Bevan: Is it not obvious that the whole conception of the threshold is absurd? There must be a large number of people in the world who are liable to be affected by the degree of radiation normally existing, and if the degree is raised is it not obvious that more people will be affected and that, therefore, the whole conception of a threshold is a


political category having no scientific validity at all? Therefore, will not the right hon. Gentleman agree that, for the sake of health, tests ought to be stopped, and would he not further agree that it is essential to stop the tests by Britain, Russia and America in order that other countries not yet making tests may be deterred from starting them?

Mr. Butler: The broader question of stopping tests does not arise on this Question, but it does arise in our consideration of the letter we have received from Mr. Bulganin and in the general development of British policy, and I will bear in mind what has been said, but I can say no more on this occasion than that we are nowhere near the limit of danger mentioned.

Mr. Bevan: Will the right hon. Gentleman reply to the first part of my supplementary question? Is it not a fact that the whole conception of the threshold has no scientific validity and that any increase in radioactivity must affect larger numbers of people?

Mr. Butler: Of course, if the effect is larger it affects larger numbers of people. It is a simple way of putting things. We are relieved to some extent to feel that it does not fall yet within the zone of extreme danger mentioned by the Medical Research Council.

Dr. Summerskill: May I refresh the right hon. Gentleman's memory? The Medical Research Council's Report to which he has referred said in 1956, when the Council reported, that if tests continued at the "present" rate—which was that before 1956—then there would be danger to the health of some "now living". Since that Report, which was made in 1956 at the request of the Government, tests have increased.

Mr. Butler: Yes, it is undoubtedly the case that there is a level of danger, but we have not yet reached the level of danger which the Medical Research Council regarded as dangerous.

Oral Answers to Questions — ATOMIC ENERGY (EXCHANGE OF INFORMATION)

Mr. Harold Davies: asked the Prime Minister what approaches were made from the United States of America asking the Atomic Energy Authority and the Government to withhold from the British

public the fact that the Atomic Energy Authority had demonstrated that deuterium nuclei can be fused together and controlled.

Mr. R. A. Butler: I have been asked to reply.
I would refer the hon. Member to my reply to my hon. Friend the Member for Chigwell (Mr. Biggs-Davison) on 21st January.

Mr. Davies: I apologise for not remembering that Answer at the moment, and so may I ask the right hon. Gentleman if it is true that we have to supply information on our atomic energy research while the United States of America, under the McMahon Act, are not prepared to give a quid pro quo to Britain?

Mr. Butler: As I said in answer to my hon. Friend the Member for Chigwell, there is being published on Friday a very considerable degree of scientific information by agreement with the United States, and they are simultaneously publishing some themselves.

Oral Answers to Questions — MILITARY AIRCRAFT (HYDROGEN BOMBS)

Mr. de Freitas: asked the Prime Minister what special training instructions in the rendering safe of airborne nuclear weapons have been given to the appropriate Service and civilian first-aid and Civil Defence units in areas of the country which are flown over by Royal Air Force and United States aircraft carrying nuclear weapons.

Mr. R. A. Butler: I have been asked to reply.
The Prime Minister has already said that these weapons are at all times in a safe, that is, unarmed, condition while they are being carried over this country. The Service and civil authorities have standard instructions on action to be taken in relation to crashed' aircraft. These instructions are kept continually under review and will be added to or amended if and when considered necessary.

Mr. de Freitas: Will the right hon. Gentleman please look at this again as there is considerable criticism not only in the Air Force but also in Civil


Defence circles on this very point, the lack of training instructions for the rendering safe of airborne nuclear weapons in aircraft which have crashed? Will he look at this again?

Mr. Butler: I will certainly keep it under review and see that my right hon. Friends principally concerned have it under review, but I have given an answer which represents the position at present.

Mr. Bevan: Can these weapons be activated in the air? In other words, can they be put into the position of being exploded by aircrews in the air?

Mr. Butler: I can only repeat what the Prime Minister has said, that these weapons are at all times in an unarmed condition while they are being carried over this country.

Mr. Bevan: I am sorry, but that is not the answer to my question. If these weapons cannot be put in the position of being exploded by the aircrews themselves, why are they carried? If they can be put in the position of being exploded, then the Prime Minister is deceiving the country.

Mr. Butler: It is quite unnecessary for the right hon. Gentleman to make remarks such as he has just made about the Prime Minister. The Prime Minister has given the House the information in his possession of what is happening. I will undertake to give an answer on the specific point raised by the right hon. Gentleman if he will give me notice, but with the information at my disposal I can go no further than the answer I have given.

Mr. Bevan: With all respect, may I ask the right hon. Gentleman again? The whole question here is whether there are, bombers on patrol duty carrying hydrogen bombs which can be detonated or fused, or whatever may be the scientific term. I use the general term "activated", which seems to me correct.

Mr. Grant-Ferris: No, it is not.

Mr. Bevan: Then let the hon. Member use the right term. The hon. Member is well-known for his scientific precision. Will the Leader of the House answer one very simple question? If these weapons are not, in the sense of the ordinary layman, alive, why are they carried? If, in

fact, they can be activated by the aircrews in the air, then the Prime Minister's answer grossly deceives the country.

Mr. Butler: I have already said that the right hon. Gentleman has no business to make remarks like that about the Prime Minister. The Prime Minister has already stated that these weapons are at all times in a safe, that is, an unarmed, condition. The reason for their being carried is presumably for operational practice, and on the question of whether they can be fused or put together in the air, I have already offered the right hon. Gentleman that if he will put a Question on the Order Paper I will answer it.

CAPITAL MURDER CONVICTION (ATTORNEY-GENERAL'S FIAT)

Mr. D. Howell: (by Private Notice) asked the Attorney-General whether he will reconsider his decision not to grant his fiat to J. S. Spriggs to appeal to the House of Lords against his conviction of capital murder.

The Attorney-General (Sir Reginald Manningham-Buller): No, Sir. The period allowed by Statute for making an application has expired and the application made during that time has been disposed of. In those circumstances I have, as I have said before, in my opinion no power to reconsider my decision.

Mr. Howell: Does not the Attorney-General regard that statement as very alarming, in view of the nature of this case, which is a precedent? It is the first time that an appeal on the ground of diminished responsibility has been entered under the new Homicide Act. In view of the comments of the Lord Chief Justice during the appeal, in respect of the extreme difficulties of juries in assessing the point in this case—the difference between emotional instability and mental instability—and the fact that the trial judge himself did not attempt to direct the jury at all on the difficulties of this matter but contented himself with circulating to them a copy of the relevant portion of the Act and leaving it to them to decide whether it was a case of capital murder or of manslaughter, is it not very regrettable indeed that the special circumstances of this precedent should not have been allowed to go to the House of Lords? Will the Attorney-General please, even at


this late stage, reconsider his decision, which is alarming to many members of the legal profession and certainly seems to lay members without legal knowledge highly regrettable?

The Attorney-General: I have told the hon. Member that in my view I have no power to reconsider my decision. This case did not involve a point of law of exceptional public importance and I cannot accept the hon. Member's observations on what the trial judge did or on what was said by the Court of Criminal Appeal as accurate or representing the position.

Mr. Gordon Walker: Would the Attorney-General not agree that when very new and difficult ideas and concepts are introduced into our law, like that of diminished responsibility, which the Lord Chief Justice himself described as a novelty in our English law, the opportunity should be taken to have a final and definitive decision on these matters? Is not that really in the public interest?

The Attorney-General: I can only give my fiat when a case raises a point of law of exceptional public importance. [HON. MEMBERS: "This does."] A case does not raise a point of law of exceptional public importance because it happens to be the first case under a particular provision of an Act.

Mr. Hale: Will the right hon. and learned Gentleman bear in mind that the trial judge said that he had the greatest difficulty in understanding the Section and that substantially he read the Section to the jury and said, "You must make up your minds as to what it means."? In view of the fact that this is a very substantial alteration of our procedure and one which was welcomed on both sides of the House [HON. MEMBERS: "No."]—well it was carried by the House and there is a great deal of Scottish authority on it—and on which it is vital that there should be for the use of Her Majesty's judges and for juries some authoritative decision, is it not a matter upon which it is extremely important that the earliest determination should be made? Would the Attorney-General bear in mind that there was a good deal of evidence of insanity in this man's family which really ought to have been considered?

The Attorney-General: I have read the evidence that was given and the summing-up of the learned judge and the judgment of the Court of Criminal Appeal and I cannot accept the hon. Gentleman's summary of what occurred as an accurate summary. As to whether or not there was evidence of insanity, that was a matter which was considered by the jury and a defence of insanity was rejected. As far as the other matters are concerned, the Court of Criminal Appeal has held that there was no misdirection, and I can see no ground—and I have considered it very carefully—for saying that there was in this case any point of law of exceptional public importance.

BUSINESS OF THE HOUSE

Mr. Gaitskell: May I ask the Lord Privy Seal whether he will announce the business for next week?

The Secretary of State for the Home Department and Lord Privy Seal (Mr. R. A. Butler): Yes, Sir. The business for next week will be as follows:

MONDAY, 27TH JANUARY—Debate on the Reports and Accounts of the British Overseas Airways Corporation, and of the British European Airways until 7 o'clock.

Afterwards, there will be a debate on the Report and Accounts of the North of Scotland Hydro-Electric Board.

TUESDAY, 28TH JANUARY—Second Reading of the Overseas Resources Development Bill.

Committee stage of the necessary Money Resolution.

Second Reading of the British Nationality Bill [Lords].

Third Reading of the Post Office and Telegraph (Money) Bill.

Second Reading of the Entertainments Duty Bill [Lords], which is a consolidation Measure.

WEDNESDAY, 29TH JANUARY—Committee and, if possible, the remaining stages of the Cayman Islands and Turks and Caicos Islands Bill; and of the Overseas Service Bill.

Report stage of the Import Duties Bill.

Consideration of the Motions to approve the Anti-Dumping (No. 1) Order; and the Draft Silo Subsidies (Variation) (England and Wales and N. Ireland) Scheme, and a similar Scheme for Scotland.

THURSDAY, 30TH JANUARY—A debate will take place on the Report of the Tribunal appointed to Inquire into Allegations of Improper Disclosure of Information relating to the Raising of the Bank Rate.

FRIDAY, 31ST JANUARY—Consideration of Private Members' Motions.

Mr. Gaitskell: In view of the importance of the Report of the Tribunal which we are to debate on Thursday, and because it refers to two matters which the Tribunal itself did not attempt to pronounce upon but specifically referred to Parliament, and as a great many hon. Members will wish to speak in the debate, may I ask the Leader of the House whether he will find an extra day?

Mr. Butler: We are under no illusion as to the importance of the Report, but we are not ready to find an extra day. We consider that one day's debate is sufficient.

Mr. Gaitskell: May I suggest to the right hon. Gentleman that we might postpone the debate on the British Overseas Airways Corporation and the North of Scotland Hydro-Electric Board, put the other two days' business on to Monday and Tuesday and have the debate on the Tribunal's Report on Wednesday and Thursday?

Mr. Butler: We have considered this matter and we consider that one day should be adequate in which to discuss the Tribunal's Report.

Mr. J. Stuart: In view of the amount of time and public money which has already been wasted in investigating unfair and unfounded allegations made by certain hon. Gentlemen opposite, may I suggest that the Leader of the House is right in saying that one day is sufficient?

Mr. Gaitskell: Although I consider that the Government should find two days for the debate on the Report, I ask the Leader of the House whether he is prepared to come to an arrangement by

which we would give up one of our Supply Days, which can be deducted later, the business can be altered, and we can have our two days' debate on the Report. It is a very reasonable proposal, if I may say so, and I ask the right hon. Gentleman to give us a favourable answer.

Mr. Butler: It is always very agreeable to have an offer of time from the Opposition, but that does not alter my view that one day is sufficient for discussing the Tribunal's Report.

Mr. Lindgren: What is the Leader of the House afraid of?

Mr. Butler: If the right hon. Gentleman and his hon. Friends want to come back to it later, they can do so, but I suggest that we have this debate on Thursday, which, I think, will be regarded as sufficient for discussing the Report.

Mr. Gaitskell: We cannot come back to this later; we have to settle it now. We have made a proposal which does not involve taking any extra Government time, and I cannot see what possible objection there can be from the Government point of view. It will be easy to rearrange the business for next week so as to have the debate on the Tribunal's Report on Wednesday and Thursday, one of those days being an Opposition Supply Day, so I ask the right hon. Gentleman to consider this very generous offer and give us a favourable reply.

Mr. Butler: I only heard the suggestion shortly before coming into the House. I still remain of the opinion that one day is sufficient, but I will discuss this proposal through the usual channels because I have not had proper notice of it.

Mr. Dudley Williams: On a point of order, Mr. Speaker. There are many hon. Members on this side of the House who would like to express their views on the proposal of the right hon. Gentleman. May I suggest that, in view of the fact that there have been about six or seven interventions by Privy Councillors opposite, it would be more in keeping with our normal practice if some hon. Members on this side of the House were allowed to express their views?

Mr. Speaker: We are on business now. We are not arguing a point of principle or merit. It is a question of the arrangement of the business of the House, and


customarily the Leader of the Opposition speaks for his own side on that matter to the Leader of the House.

Several Hon. Members: Several Hon. Members rose—

Mr. Speaker: Order. If there is to be a debate of one or two days on the Tribunal's findings we must not anticipate it now in the guise of questions on business. They are two quite separate things. Mr. Shinwell.

Mr. Shinwell: May I ask the right hon. Gentleman—

Several Hon. Members: Several Hon. Members rose—

Mr. Speaker: Order, order. I have called the right hon. Member for Easing-ton (Mr. Shinwell). If hon. Members have a complaint against my handling of this matter, they must take the proper course.

Mr. Shinwell: I merely want to ask the right hon. Gentleman whether the debate on the Tribunal's Report will take place on a Government Motion.

Mr. Butler: Yes, Sir.

Mr. Shinwell: What will be the nature of the Motion?

Mr. Butler: We will table the Motion when we are ready, but, clearly, we shall wish to accept the Report.

Sir R. Jennings: On a point of order, Mr. Speaker. Would it not be possible, through you, to suggest to the Leader of the Opposition—

Hon. Members: No.

Mr. Speaker: Order. The hon. Membes has not made an auspicious beginning with his point of order, but I think I ought to hear what it is before I express an opinion.

Sir R. Jennings: I should like to ask, through you, Sir, how it is possible to restrict speeches in this House, under the guise of Privilege, from making allegations against innocent people outside this House who have no possibility of defending themselves? If such statements were made outside this House the ultimate result would be in the courts of justice.

Mr. Speaker: The hon. Member has raised a very large question there, but the Privilege of this House is absolute. We rely upon hon. Members using that with

a discretion which is appropriate on these occasions.

Mr. Dudley Williams: Further to that point of order, Sir. Right hon. and hon. Members of this House are rightly given a great degree of privilege, and it is absolutely monstrous if people blackguard others who have no opportunity to defend themselves.

Mr. Speaker: I have not heard anybody being blackguarded today. Mr. Soames.

Several Hon. Members: Several Hon. Members rose—

Mr. Speaker: Order. Major Legge-Bourke, on a point of order?

Major Legge-Bourke: It is not a point of order, Mr. Speaker, but I would like to ask a question.

Mr. Bevan: Mr. Bevan rose—

Mr. Speaker: Does the right hon. Member rise to a point of order?

Major Legge-Bourke: On a point of order, Mr. Speaker. The Leader of the Opposition has put a very serious question to the Leader of the House about the sacrifice by the Opposition of a Supply Day. Would it not be in order for one hon. Member from this side of the House to make a comment on that? It is only that that I wish to do. May I suggest that the sacrifice of a Supply Day means sacrificing the protection of the rights of the taxpayer?

Hon. Members: Oh.

Mr. Speaker: Order. The Supply Days are traditionally at the disposal of the Opposition. It is for the Opposition to choose what subjects they wish to discuss. Does the right hon. Member for Ebbw Vale (Mr. Bevan) propose to rise to a point of order?

Mr. Bevan: Mr. Bevan indicated dissent.

Mr. Peyton: On a point of order, Sir. I wish to put it to you that on the proposal which has been made by the Leader of the Opposition very few back bench Members have had any opportunity to comment. As one of those—

Mr. Speaker: That is not a question for debate. The last answer I heard from the Leader of the House was that he had just heard of this request before he came


into the House, and that he would consider the suggestion through the usual channels. We cannot have every point of business farrangement debated on both sides of the House, or we should never get anywhere.

Several Hon. Members: Several Hon. Members rose—

Mr. Short: Is it not a fact, Sir, that before this series of points of order started, my right hon. Friend the Member for Ebbw Vale (Mr. Bevan) was on his feet asking a question?

Mr. Speaker: In answer to that point of order, the right hon. Gentleman is now seated.

Mr. Bevan: Mr. Bevan rose—

Mr. Speaker: I hope that the House will cease consuming time with this matter. There is no Question for general debate before the House. We are discussing the business for next week. One day was allotted to Thursday's business and then there was a suggestion that there should be two days, which was modified into a suggestion that the second day might be provided by the Opposition. That is to be considered through the usual channels. The House is consuming time on this matter. We are long past the time for Questions and there is more to do before we can get to today's main debate. I must decline to hear any more on this matter.

Later—

Mr. P. Williams: On Monday's business—

Mr. Speaker: Order. We have passed from that.

BILL PRESENTED

LAND POWERS (DEFENCE)

Bill to provide for the termination of certain emergency powers and to make certain provision in substitution therefor; and for purposes connected with the matters aforesaid, presented by Mr. Soames; supported by Mr. R. A. Butler, Mr. John Maclay, Mr. George Ward, Mr. Hare, Mr. Watkinson, Mr. Maudling, Mr. Aubrey Jones, Mr. Marples, and Mr. T. G. D. Galbraith; read the First time; to be read a Second time upon Monday next and to be printed. [Bill 57.]

NEW WRIT (BOROUGH OF ROCHDALE)

Motion made and Question proposed,
That Mr. Speaker do issue his Warrant to the Clerk of the Crown to make out a new Writ for the electing of a Member to serve in this present Parliament for Rochdale in the room of Lieut.-Colonel Wentworth Schofield. T.D., deceased.—[Mr. Heath.]

3.52 p.m.

Mr. Ede: I apologise to the House for intervening at this stage on a day when there is to be a debate of the utmost importance, but I had assumed, in accordance with the custom of late, that this Motion would have been moved tomorrow morning. As it was moved this afternoon, I had to challenge it at once or lose all opportunity of drawing attention to the circumstances which surround it.
I can only think that it is by inadvertence that the right hon. Gentleman the Patronage Secretary has put down this Motion for this week. The fact is that this poll will be taken on the stalest possible register. The effect of passing this Motion this week will be that only people who were resident in the Borough of Rochdale on 10th October, 1956, will be able to vote—[HON. MEMBERS: "Shame."]—whereas if the Motion had been put down for Monday, or any other day of next week, those in residence on 10th October, 1957, would have been able to vote.
I cannot think that the right hon. Gentleman has much real interest in the outcome of this by-election. It is very difficult to find anyone who thinks that the right hon. Gentleman's candidate will be other than No. 3 in the poll. I remind him that he had a warning in what happened at Lewisham, North about this time last year, when he played the same trick on the electors there.
In view of the importance of the debate which is to follow, I will say no more, but I wish to protest most strongly against the continued way in which every effort is made to avoid an appeal to a live electorate which is capable of speaking with modern precision on the issues before it.

3.55 p.m.

The Secretary of State for the Home Department and the Lord Privy Seal (Mr. R. A. Butler): May I say, in reply to the right hon. Gentleman the Member for South Shields (Mr. Ede), that the Government have deliberately moved this Motion for the reason that by the time this by-election will have been held the seat will have been vacant for two months. [HON. MEMBERS: "Hornsey."] Hon. Members refer to Hornsey. In that case the Opposition made a great fuss and row because we did not move the Motion early and because they did not want the seat to be vacant for so long. We are deliberately taking the advice of the Opposition in moving this Motion in good time so that there shall not be a long period of vacancy.
The right hon. Gentleman referred to the new register, but he knows perfectly well that political parties and their agents have to work on the new register. If we waited for the new register the seat would be vacant for a time which I think constitutionally improper. We have considered all these matters and, under the circumstances, I think that we have chosen the right time to move the Motion.

3.56 p.m.

Mr. Marcus Lipton: The reply of the Leader of the House to my right hon. Friend the Member for South Shields (Mr. Ede) was so puerile that it cannot be allowed to pass without a protest. I remember that a year ago I pro-

tested when the Parliamentary Secretary to the Treasury moved a Motion for the issuing of a Writ for Lewisham, North and did not condescend to explain to the House why he was asking the House to agree to the Motion. As a result, the Lewisham, North by-election was held one day before the new register came into operation and thousands of voters were disfranchised. As a result of accepting this Motion, thousands of voters in Rochdale will be disfranchised. People complain about the disrepute into which this House is falling. One of the explanations for it is conduct of the kind which we are now asked to accept.
I quite understand that the Government do not want the true voice of democracy to express itself. They know quite well that if a General Election took place they would be out. They know that there would be a vastly increased majority against the Government if a new register were adopted as the basis for the by-election in Rochdale. The action of the Government in this case will so stink in the nostrils of democratic people everywhere that we have no doubt about what the result in Rochdale will be.

Question put and agreed to.

Resolved,
That Mr. Speaker do issue his Warrant to the Clerk of the Crown to make out a new Writ for the electing of a Member to serve in this present Parliament for the Borough of Rochdale in the room of Lieut.-Colonel Wentworth Schofield, T.D., deceased.

ECONOMIC SITUATION

4.2 p.m.

The Chancellor of the Exchequer (Mr. Derick Heathcoat Amory): I beg to move,
That this House supports Her Majesty's Government in their resolve to maintain by every effective means the internal and external value of the pound sterling.
In addressing the House in an unaccustomed rôle, I do so with wistful glances every now and then over my shoulder at Agriculture, Fisheries and Food. The events of two weeks ago have resulted in us parting from three colleagues for whom and for whose abilities I have the very greatest respect and whose friendship I value. On the other hand, it is with no quailing heart or in any faltering mood that I take up my new appointment. The economic problems that confront us, though formidable, seem to me to be entirely soluble if we continue to face them resolutely and with a single-minded will to beat them.
Hon. Members will, I know, forgive me if I do not, for obvious reasons, today treat them to a full discourse on the technicalities of public finance and economics. Were I to do so, the Leader of the Opposition, with his cunning leg breaks, would no doubt improve his bowling average, but I can assure the right hon. Gentleman that I shall be assiduously practising at the nets every day from now onwards. When we were together in India recently, at the Commonwealth Parliamentary Conference, we found ourselves sitting for a week in fraternal, or more or less fraternal, association side by side. At that time, I think we agreed that that intimate juxtaposition would not be likely to last long on our return home.
First, I want to say a few words, and only a few words, about the differences between our former colleagues and the rest of us in the Government. I should like to give hon. Members a brief report of our current economic situation, as I see it, and give Parliament as clear an indication as I can of the general policies I shall be following at the Treasury to the best of my ability so long as the present economic conditions continue.
I have already said in a public speech that I found no difference between our

three colleagues and the rest of us either about the need for our present anti-inflationary policies or about the paramount priority that must be given to them. The differences concerned the most effective means of promoting those policies. My right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft) seemed to me to attach importance exclusively, if I may say so, to one aspect of the problem, namely, the desirability of avoiding any increase whatever between this year's and next year's estimated expenditure by the Government. While we were in agreement about the need for substantially achieving that aim, we considered that that was not the only criterion of an effective anti-inflationary policy or its only aspect. There were other aspects that required consideration, too.
I ought here to make it clear on what basis the comparison was made. There has been some misunderstanding about this, although it was accurately stated by my right hon. Friend the Member for Monmouth in his speech to his constituents. We were comparing the total of the Parliamentary Estimates and the probable Supplementary Estimates for the current year with the draft original Estimates which had been prepared for 1958–59. There was no difference between us that strenuous and painful efforts must be made to reduce next year's draft Estimates, and that the greatest efforts should be made to eliminate any increase in so far as that was either practicable or possible without running the risk of defeating our whole object. That is what we set out to do.
We were, of course, well aware that the total Estimates for the current year are not the same as the current year's out-turn, and that the original Estimate for next year is not the same as next year's eventual expenditure, but the basis of the comparison we adopted was really the only basis available for preliminary review by the Cabinet round the turn of the year.
An idea seems to be prevalent in some quarters that proposals for economies amounting to about £50 million were made but rejected, and that that was all there was to it. That would give a most incomplete impression of what happened. The truth is that considerable economies in the civil field had already been imposed and accepted by Departmental Ministers. My right hon. Friend the


Minister of Defence and his Services colleagues had each succeeded in making effective reductions. My right hon. Friend the Member for Monmouth believed, however, that certain further economies ought to be made now which would have involved changes in policy which the rest of us felt would have been unwise, because they would, in our opinion, have been positively damaging to our anti-inflationary policy.
I do not propose to specify them today in detail—[HON. MEMBERS: "Why not?"]—because to do so would not be possible without disclosing Cabinet discussions. But we all considered them very carefully, with every determination to make the biggest reductions which we thought practicable, and we had in mind both the inescapable responsibilities of the Government and the effect that our action might have on the success of the battle against inflation. In our opinion, if actions are to be effective in promoting this general objective they must be considered by people generally as reasonable, sensible and fair. That is by no means the same thing as saying that they must be popular. On the contrary, at a time like this, the right steps are almost bound to be unpopular.
Were these differences between us differences of principle or of method? It is always difficult to be dogmatic upon an issue like that. One party to a dispute may sincerely regard as a matter of principle something which the other looks upon, equally sincerely, as a matter of method or emphasis only. I can only say that the rest of us regarded, and still regard, the differences that arose as not being matters of principle; nor have I yet managed to convince myself that they were beyond the possibility of reconciliation. This unfortunate disagreement has left the rest of us surprised and perplexed that our colleagues should have pressed it so far and so fast.
That is all that I can usefully say about the matter at present, although I shall be returning to the general question of Government expenditure in a few moments. Before doing so, however, I should like to deal with more general economic issues. I dare say that hon. Members will hardly expect a new Chancellor of the Exchequer to give a confident and comprehensive analysis of the economic situation after a fortnight in

office. In a few months' time I expect to be doing so, and proposing such measures as I then consider to be necessary. All I can do at this stage, however, is to give, very briefly, a picture of our position as I see it now.
The problem with which we were confronted in August and September last was of growing doubt, both at home and abroad, of our ability to maintain the value of our own money. This doubt stemmed from two roots: first, the suspicion that we were attempting to do too much and were in continual danger of meeting the gap between our resources and our wishes by methods of finance which, in effect, might be inflationary and, secondly, the belief that we were unlikely to show sufficient restraint in the field of wages, costs and prices.
It was, and is, our task and our firm resolve to prove these doubts groundless, and it was against them that the statement of 19th September and the measures then announced—unanimously supported by us all—were directed. And these measures are working.
I will deal, first, with the pressure of demand upon our resources. The actions taken in September have clearly already produced a good effect. Let us take bank advances as an example—and I think that it is quite a good example. The Government said that in their view the situation required that the average level of bank advances during the next twelve months should be held at the average level of the past twelve months. The bankers assured my predecessor at that time that despite the difficulties they would intensify restrictions on credit and do their best to achieve that result.
The clearing bank figures for advances for the last three months show a reduction of £108 million. In the same period last year advances increased by £27 million. I am grateful to the bankers for this result, but I must look to them to maintain their restrictive attitude, for the requirements of the situation now are the same as they were last September.
At the same time, when the Bank Rate was raised to 7 per cent. it was explained that this exceptional rise was made necessary because of the speculative pressure against sterling but that, apart from that, an increase was required in any event to give support to the other measures that were applied then, during the period in


which they were developing their full effect. I am not going to be lured into predicting the duration of the present Bank Rate, nor the future course of money rates generally. I shall confine myself to saying that events since 19th September last have shown the effectiveness of the Bank Rate in counteracting external pressure on sterling and also in supporting our internal measures.
In September, we also announced our intention of keeping investment in the public sector for the next two years—1958–59 and 1959–60—within the expected level of such expenditure in the current year. Arrangements to this end are going forward satisfactorily.
Unemployment remains at low levels, but the demand for manpower is becoming a little less strong. [Laughter.] I would ask hon. Members opposite to compare the figures. With the help of lower import prices there are also welcome signs of price stability in export and wholesale prices. In this connection, I am sure that hon. Members will agree that where costs fall or productivity increases it is important that the consumer should share in the benefits. But, most important of all, I believe that there is a growing realisation on both sides of industry of the dangers of inflation and the realities of our present position.
Turning to the external position, the first fruits of the measures that have been taken have been satisfactory. The exchanges have been strong, the reserves have increased again, and the world has acquired confidence in our determination to maintain the value of the £. The world is right to do so, because that is our fixed purpose. We shall the better succeed in this if we recognise, as I do, that this period of recovery is only a stage along the right road, and not the end of that road. The main task lies here, at home, but it will be made easier by the help and co-operation of our friends in the Commonwealth and elsewhere who have a common interest in the maintenance of the strength of sterling.
As for our balance of payments prospects, I see no reason to vary the statement which my predecessor made a month or two ago, that we can hope for a surplus during the current year, to June next, rather larger than the £211 million

surplus that we earned last year. The current trading results are quite good. My right hon. Friend the President of the Board of Trade has just returned from a visit to North and Central America, where he had a valuable opportunity to study the opportunities and the prospects which exist for more trade across the Atlantic, and he confirmed that, with vigorous efforts on the part of all concerned, it should be within our power to obtain a considerable expansion of our export trade with these markets.
Nevertheless, looking to the future, a note of caution needs sounding on the trading front. The terms of trade at present are very favourable to us, but the income of some of our main customers is falling. Looking ahead, we shall have to fight much harder to maintain our level of exports and, perhaps, to accept lower prices for them.
What is the likelihood of a substantial recession in the United States, or of a general trade recession? We cannot yet tell, though we can draw encouragement from President Eisenhower's recent messages to Congress. What I think is certain is that such a possibility on the horizon makes it more and not less necessary that we should remove the weakness of inflation from our system and so be in strong and vigorous fettle to meet whatever rough weather may lie ahead.
My general conclusion is that in spite of much encouraging progress it would be entirely premature to suppose that the situation has been transformed or that there is no longer a need for the full maintenance of the measures announced in September. They will, therefore, all go on just as long as they are judged to be necessary.
What is the prospect for price stability? Within the next few months a number of applications for wage increases look like coming to a head. All my life in industry I worked as hard as I knew how for better industrial relations. I loathe industrial warfare, for two reasons: first, it has always seemed to me the surest way of denying to those who earn their livelihood in industry the pride, satisfaction and happiness that come from working as a member of a purposeful team; and, secondly, it is a crude and clear case of self-inflicted


wounds, sometimes of wounds from which recovery is difficult. A lapse into industrial warfare would be for me a sad acknowledgment of how little progress we in Britain would be shown to have made in this vitally important field of human relations in industry over the last thirty years. I believe that we have made progress in that field.
Having said that, I want to put on record my firm conviction that the national interest ought to take precedence over any sectional interest, however strong. No organisation or section of the community has any right to press its own interests to the point of damaging the national welfare. If it has, what is the object of organised society? My idea of organised society is certainly not, "Every man for himself and let him grab what he can." Applying this principle to the present situation, I want to repeat what my predecessor said, namely, that, in prevailing circumstances, another round of wage increases such as we had last year would spell disaster. So, as I said last week, I trust that all concerned, if they have, as I am sure they have, our national welfare at heart, will pause and reflect. We have so much to lose and it can be lost so easily by ill-considered and selfish action.
From the point of view of beating inflation and of maintaining the strength of sterling I have no hesitation in saying that the stabilisation of personal incomes is at present the key to success. That applies to all forms of personal income. The tighter monetary measures imposed in September are clearly making profits harder to obtain. So far as wages are concerned, I am certain that at this critical point, when we are, I believe, on the verge of success in attaining stable prices, a sensible restraint in pressing demands for higher wages must be in the true interests of all wage earners. I say it with the utmost sincerity. To think otherwise is surely very shortsighted.
I would ask those seeking higher wages to remember that during recent years the increases which they have had have been bigger, overall, than the rise in the cost of living. On the other hand, those sections of the nation who have had to live on fixed incomes have suffered quite a severe reduction, shortly to be made good in the case of the old-age pensioners. The maintenance of the value of sterling, let

us not forget, is vital to the security of our own national standard of living. People abroad, I am sure, are watching this aspect of our national economy with far closer attention than any other and their future actions in regard to sterling may well depend upon the conclusions they draw.
Does all this mean a repressive or static attitude to wages? Quite the contrary. In my economic philosophy high wages are a corollary to high output. Increasing output per head is the means both to improving wages and to lowering prices.
Turning now to Government expenditure, I cannot talk today in any detail about next year's Estimates. They are not yet completed and we cannot have the figures before us yet. The full picture will be seen when the Vote on Account and the Defence White Paper are published in the middle of next month. There can be no dispute that it is the Government's duty at all times, and especially in circumstances such as they are facing today, to insist upon the greatest economy practicable in Government expenditure. That we shall continue to do. It would be folly to imperil the whole structure of society by trying to do more than we can afford. There are many things that are very desirable, and very productive, too, but which must be left undone for the time being.
I have already, as a new Chancellor of the Exchequer, noted a strange phenomenon, a sort of schizophrenia in the minds of many people, over Government expenditure. The more vociferous the critics of the level of expenditure the more inclined are they, and almost in the same breath, to call for something more: increases in commitments abroad, more new roads, higher rates of pension or more grants for the sustenance of their own particular hobbyhorse. Other Chancellors have noticed the same phenomenon.
Many people have the impression that Government expenditure has been absorbing an ever-growing proportion of our resources; that is not the case. Between the periods 1951–52 and 1956–57 the ratio of ordinary Government expenditure above the line and the gross national product has fallen fairly steadily from 32 per cent. to 27 per cent.—quite an achievement. The plain fact is that there


is a limit to the cuts which can be effected in Government current expenditure suddenly, without neglecting basic responsibilities or creating rank inefficiency in administration. Indeed, I doubt whether it is often good sense to change policies suddenly or impulsively.
I do not mean, and I have been careful not to imply, that there is any field of expenditure which is sacrosanct or immune from economies; that is certainly not the view or the attitude of the Government. I do not deny that, apart from the level of defence expenditure, there are some items which afford me a good deal of anxiety; for example, the deficits that will arise under the existing National Insurance Scheme in future years.
My right hon. Friend the Prime Minister indicated in his speech in the debate on the Address that the Government were giving consideration to the wider aspects of the problem of provision for old age. I can confirm that a thorough study of possible new measures is being carried out. We have not yet sought the assistance of the hon. Member for Coventry, East (Mr. Crossman) in that task. Now a word about this year's Supplementary Estimates.

Mr. Harold Davies: I am very grateful to the right hon. Gentleman for giving way. I wanted to make sure that I heard the Chancellor of the Exchequer accurately. Did he say, "apart from defence expenditure"? Does he mean that defence is sacrosanct and that we are going on with the missile-base project? I want to understand clearly, for the rest of the House knows, as I know, that the Government never tell the House the truth.

Mr. Amory: I am very anxious that the hon. Gentleman should understand what I did mean and what I did say. He will remember that, earlier, I said that my right hon. Friends the Minister of Defence and his Service colleagues had already offered and introduced considerable economies in the Defence part of the Estimates.
As the House knows, Supplementary Estimates for the agricultural Votes have already been presented at a total of about £54 million, made up of £10 million which results from the award made after the 1957 Farm Price Review, and the

remainder being required under the system of the price guarantees as a result of the recent fall in world commodity prices. The consumer has without question benefited from this fall in food prices.
The rest of the Supplementary Estimates will be presented shortly. These will amount to about £100 million. I have seen it suggested in the Press that the necessity for such large supplementary provision has come as a sudden surprise to the Government and that it represents a weakening in the Government's determination to hold down its expenditure. Neither of those suggestions is true. These Supplementary Estimates have been foreseen for some time. Indeed, simply because we knew that large Supplementary Estimates in certain directions would be required the Government have intensified their efforts to achieve economies in current expenditure and absorb as many of those necessary increases as possible.
The results, of course, do not show in their entirety in the Supplementary Estimates. They show themselves partially in underspending elsewhere on Votes. The total of these underspendings will not be known until the last day of the financial year, but they will clearly form a considerable offset to the total sum asked for in the Supplementary Estimates.
Finally, I can sum up the economic policies that I shall be carrying out in present circumstances very briefly.

Mr. R. T. Paget: Before the right hon. Gentleman leaves the proposed accounts, has he considered as a candidate for cuts interest on the National Debt?

Mr. Amory: The reductions that I referred to concern Parliamentary Votes and not the Consolidated Fund expenditure. The whole sphere of Government expenditure is the subject of examination and study.
I can sum up the economic policies that I shall be carrying out in present circumstances very briefly. Inflation is still the enemy. The firm anti-inflationary measures adopted last September must be continued without relaxation as long as is necessary and we shall continue to limit Government expenditure with severity. Our aims remain exactly as they were—stable prices at home and a stronger £ abroad. Those two problems are closely interconnected and the


remedies required at present are the same. The test that we shall continue to apply on all financial issues is: will the proposed action under consideration help damage or forward the attainment of our dominant aim? There can be no flexibility about those aims. Of course, the world situation changes—

Mr. Roy Jenkins: Mr. Roy Jenkins (Birmingham, Stechford) rose—

Mr. Amory: I wonder whether the hon. Gentleman will let me finish this point, and then I will gladly give way.
There can be no flexibility about these aims, but, of course, the world situation changes and we must be ready to vary our practical measures when the need arises. If we need to tighten up, then we shall do so. Equally, when we find that we have attained a position in which we can safely resume expansion, then we shall certainly go ahead with relief and zest.

Mr. Jenkins: Could the right hon. Gentleman tell the House what priority, if any, alongside these other aims he has outlined, he gives to expanding production in the immediate future?

Mr. Amory: The dominant aim must he the joint aim that I have mentioned—the strength of sterling abroad and stability of prices at home. Nothing must take precedence over them. When success has been achieved in that direction, then we can confidently go ahead with increased production.
The long-term future of our country lies in the fullest use of all our resources, both human and material, and in the maximum exploitation of all the technical opportunities that our scientists and engineers are placing at our disposal. The foundation for this must be a strong and stable currency.
Most of what I have said today will sound rather cold, inhuman and mechanical. Perhaps that is inevitable when one is discussing economics and finance. However, my philosophy is not of that kind. I would like to declare my faith that in all these matters it is not true to say that we are slaves to an economic machine. We are not robots. We are masters of our own fate. If we have the will to exert ourselves and the unselfishness not to push our individual interests and claims to the point of

damaging our country's welfare, then we shall prosper—in other words, if we are true to our national character.
I have enough faith in my fellow countrymen to feel confident that if only the issues at stake can be made clear enough to them—and I shall do my best to help in that way—right actions will follow. Our current difficulties will then certainly be successfully overcome and as a nation we shall give a good account of ourselves in the tasks or in whatever weather lies ahead.

4.38 p.m.

Mr. Hugh Gaitskell: I beg to move, to leave out from "House" to the end and to add instead thereof:
having regard to the record of the Government, which no longer enjoys the support of the people of Britain, has no confidence in the capacity of Her Majesty's Ministers to pursue policies which will secure expanding production, full employment and a stable pound".
Before I address myself to the Amendment, I wish to extend my congratulations and my sympathy to the Chancellor on his new appointment. His courtesy and his modesty have always commended themselves to the House. He will need both, and I am sure that he will make use of both, in the future.
Perhaps it was unfortunate that the right hon. Gentleman was so modest this afternoon as to decline to give us a detailed account of Government policy. However, even if we felt there was a conflict between some of the aspirations which he mentioned, such as the importance of productivity and the policy that he is apparently defending, even if we detected an inconsistency between his appeal to the trade unions for restraint and his indifference to the effects of the Rent Act, we shall continue to hope that in time these conflicts and contradictions will become clearer to the right hon. Gentleman as he proceeds in his office and that he will be able to decide on which side of the fence he will come down.
The circumstances of this debate are unusual, indeed unique. There have, of course, been previous resignations by Chancellors of the Exchequer, although only two, I think, in the past hundred years, but I cannot recall an occasion when all the Ministers of the Treasury have resigned. Moreover, these resignations were not the only ones which have occurred during the last two years. Apart from the unfortunate illness of the


former Prime Minister, there was the resignation of the Lord President of the Council, the refusal of the Minister of Defence to accept office and now the resignation of the former Chancellor of the Exchequer and his colleagues. I think we can say of this Government that it is in a fair way to beating the record of the Balfour Administration of 1902–1905, when the Prime Minister of the day succeeded in securing the resignations both of his Right wing and of his Left wing and subsequently suffered a major political disaster.
Our own reaction to the news of the resignation of the previous Chancellor was confined at first to the obvious comment that the Government were disintegrating. We felt that, apart from saying that, it was better to listen to what was said by way of explanation and to watch in, as it were, on a family quarrel. Well, the explanations came thick and fast. One can detect, I think, in the statements made by the Ministers and by back benchers, during the last few weeks three different points of view. There are those who do not consider that there was any issue which justified the resignation of the Ministers. There are those who, on the contrary, recognise that there was an issue of principle and who also believe that the right hon. Gentleman and his colleagues were right. There are also those who accept that there was an issue of principle, but believe that the right hon. Gentleman was wrong.
In the first group we must, of course, put at the head of the list the Prime Minister. He described the whole affair as "these little local difficulties". He was at pains to point out that this was a trivial matter and that he could not really understand why the right hon. Member for Monmouth (Mr. P. Thorneycroft) had taken the action he took. The Prime Minister was supported, I think we may say, by the new Chancellor of the Exchequer, who has more or less confined himself to saying that he was perplexed by the whole affair. As we would expect, the Prime Minister has also been supported by the Foreign Secretary. His comment, as usual, was entirely loyal:
I did not know, nor do I now know of any difference of principle or outlook between Mr. Thorneycroft and the rest of the Cabinet.
I think we must also class the hon. Member for Louth (Mr. Osborne) with those

distinguished colleagues of his. His remark that "many Conservative voters were mystified by the resignations" and the fact that he went on to say,
Is there something over and above the £50 million? If so, they should be told.
puts him in that category.

Mr. Cyril Osborne: Would the right hon. Member new quote what the Daily Herald editorial said in May, 1950, when his right hon. Friend the Member for Ebbw Vale (Mr. Bevan) resigned?

Mr. Gaitskell: The second group, that is to say, those who believe that there was an issue of principle here and that the Ministers who resigned were right, are, of course, led by the Ministers themselves. I think that the clearest statement was made by the right hon. Member for Flint, West (Mr. Birch):
The Treasury Ministers were out to win the Battle of Inflation; the others were not. We were fighting to win; they were not. That is what it was about.
That, I think, is a fairly clear and definite statement.
But the hon. Member for Wolverhampton, South-West (Mr. Powell), the previous Financial Secretary, perhaps put the whole issue most precisely when he said:
First, the issue was not over £50 million nor any other specific sum, though I do not personally regard 1 per cent. of national expenditure as a triviality. Secondly, the issue was not family allowances or any other specific item of welfare or other expenditure. The issue was whether Mr. Thorneycroft felt he had the necessary minimum support from his colleagues for the policy to which he and they were committed. He was forced to the conclusion that he did not have that support and neither Mr. Birch nor I could avoid coming to the same conclusion.
That was the issue and there was no doubt about the feelings of the former Financial Secretary.
These three were supported by hon. Members on the back benches. I cannot quote them all, but the noble Lord the hon. Member for Dorset, South (Viscount Hinchingbrooke) said quite categorically:
What is clear is that the Chancellor did not resign over a mere £50 million in the Estimates. It is too narrow a margin to make for a fundamental cleavage.
It will be interesting to see what political alignment will be made between the noble Lord and the former Chancellor of the Exchequer.
We would be making a mistake, however, if we were to ignore the third group. There is no doubt that there were also right hon. and hon. Members who took an opposite view to that of the then Chancellor of the Exchequer and, of course, the chief of those is the acting Prime Minister. In one of the clearest statements he has made that I can recall, and in what he described as a statesmanlike speech because he was in his constituency, the right hon. Gentleman said this:
In the discussion we had, very strong convictions were expressed and I, for my part, am not going to abandon the convictions of a lifetime. If we had had to readjust and alter some of our social policy in the way suggested, we should have had to do so without due regard to humanity and common sense in facing the dual problem of inflation—limitation of money and limitation of the desire for rewards.
It meant that the Government would have been asked to overturn, in the course of a few days, policies of social welfare to which some people had devoted the service of their lives.
Those are admirable sentiments and we hope the acting Prime Minister will continue to uphold them in the discussions which, apparently, are now taking place.
The right hon. Gentleman was supported by one or two colleagues, including the new Financial Secretary to the Treasury, but I am not quite sure what the hon. Member for Oldham, East (Sir I. Horobin)—who has recently been appointed to the Government—felt about all this. We await with interest his comments on the whole affair. Nor is it easy to categorise the Lord President of the Council. He was exceedingly sharp with the former Chancellor of the Exchequer, but, on the other hand, rapidly explained that he was wholly in favour of the most sweeping review of the social services, in terms which were very different from those used by the Lord Privy Seal.
The latest developments in this interesting story are still wrapped in mystery. We understand that there have been three, or is it four, Cabinet meetings to discuss further cuts in the social services. Further resignations are rumoured. Of course, we would welcome any information on this interesting topic which the Government feel disposed to give us. We hope, in any event, that if there are to be changes in the policy in the social services statements will be made at the earliest possible moment.
As to the resignations of the Treasury Ministers, there is not really much doubt about what the immediate issue was. The previous Chancellor held that estimates of Government expenditure this year, that is to say, for the next financial year, must not be above the actual amount spent in the current year. He held that view clearly because he regarded it as something to which he was pledged as part of the general freeze-up which he announced in September and in statements thereafter.
One can understand the right hon. Gentleman's point of view, because he had come to the House and had said that not only was there to be a general freeze on Government expenditure but that even individual Departments must not exceed their previous level of expenditure. He said that if there were to be any increase, for instance, in pay, the Departments would have to find economies in other ways. He was constrained as a result of his policy to turn down, through the Minister of Health, what most of us regarded as an extremely reasonable claim on the part of the National Health Service employees. He was driven to instruct the British Transport Commission that no more money would be forthcoming for any increase in wages, however meritorious the increase in wages might be.
The right hon. Gentleman was put into this position, and I do not think it is surprising, therefore, that he felt somewhat aggrieved when he found that, after all, his colleagues would not march with him. They feared, as we know, that if there were to be these cuts in the social services there would be repercussions upon the wage claim situation. The former Chancellor was quite categorical in his answer to that. The whole thing is set out most clearly in the speech made by the Prime Minister at Karachi and the speech made by the right hon. Member for Monmouth at Newport the following day. If I may, I will read the relevant extracts.
The Prime Minister said:
All had been agreed on maintaining Government expenditure at the present levels; the only question was whether they held it at exactly the same figure or slightly above. To hold it at the exact figure would have involved cuts in welfare and social services which might have had the effect of stimulating new wage claims. This would add far more


to the inflationary burden than would have been saved by maintaining the precise level of Government expenditure.
The right hon. Member for Monmouth, perhaps in commenting on that speech, said:
It is said by some that you must not touch the Welfare State … that if we touch it it will automatically mean high wage demands … It is not the making of wage claims but-the printing of the money to grant them which feeds the wage-price spiral.
What the right hon. Gentleman was saying was that it does not matter whether we stimulate wage claims and it does not matter whether prices rise and wages go after them. He is saying that we can always stop wages from rising by cutting down the supply of money. He is saying, in effect, that there is no need to bother about what most of us on this side of the House and even some hon. Members opposite call the wage-cost inflation. He is saying that we need not bother about that; all we need to do is to concentrate on the demand side. I think that the right hon. Gentleman will not deny that that is a fair interpretation of his comments upon the Prime Minister's statement.

Mr. Geoffrey Hirst: Very distorted.

Mr. Gaitskell: If the hon. Member wishes to explain these exchanges between the Prime Minister and the former Chancellor of the Exchequer in some other way, it is open to him to do so, but that is the only sense which I can make out of them.
The views of the former Chancellor were strongly supported by the former Economic Secretary, when he spoke on the following day. The report reads:
In recent published statements some Ministers had implied that it was rash and foolish to do something, even if one believed it in the national interest, that might annoy trade union officials. 'The consequences of such an attitude will be in the future what they have been in the past'.
I think we all knew what he meant by that. He meant that he believed—and it is a perfectly honest belief; I have not the slightest doubt about that—that the Government had been far too kind to the views of trade union officials and had taken much too much notice of any possible influence that their actions might have on wage claims, and he meant that the Government should concentrate

firmly on seeing to it that whatever the circumstances, unless there were some startling change, there was no finance to meet the increased wage demands.
Of course, we do not share the views of the former Chancellor of the Exchequer at all, and I shall have much more to say about that in a moment. Nevertheless, I have some sympathy with him in his feeling of being let down by his colleagues, for I am afraid that there is not much doubt that in September he introduced a new and much sharper policy, the whole emphasis of which was on limiting the supply of money no matter what happened in stirring up wage claims.
Why did the right hon. Gentleman take this view? I think that the House must consider this question, and in dealing with it I hope I shall be interpreting the right hon. Gentleman correctly. I will certainly do my best, because although I disagree with his point of view I think I understand it.
I think the right hon. Gentleman felt that after the crisis in September the situation was so serious that desperate measures were necessary. He looked back on the record of the Government in these past two years, on the record of the last six years, and, indeed, on the whole of the post-war period. [HON. MEMBERS: "Hear, hear."] I will come back to that in a moment, but the right hon. Member for Monmouth does not usually take responsibility for what happened before 1951.
He found that since 1951 prices had risen by 30 per cent., about 5 per cent. a year, and that in the last two years they had gone up by a figure between 8 per cent. and 9 per cent. In round terms the tendency seemed to be for prices to increase at about 5 per cent. a year. He must have realised that since 1951 this had happened in Britain despite remarkably favourable external conditions. Obviously, that is a serious matter requiring, at any rate, some kind of action.
Secondly, he must have realised that in the last three years there had been three crises—in the autumn of 1955, in the autumn of 1956, and in the autumn of 1957. He must have remembered the enormous drop in the gold reserves, despite substantial borrowings from the International Monetary Fund and the


United States. He must have appreciated that although the 1955 deflationary policy had temporarily improved the balance of payments situation in the United Kingdom it had patently failed to stop prices from rising, although, of course, it led to the checking of production and virtually held production stagnant for the whole of the two years.
The right hon. Gentleman came to the conclusion, as he was bound to do, either that the policy was wrong and had to be reversed or that it had to be pushed harder and further no matter what the cost, no matter whether it produced further declines in production and employment and no matter whether there was some industrial trouble. He doubtless estimated that this would not be on a large scale.
The right hon. Gentleman decided that this latter course was the only possible course to pursue, and I would say to him and to hon. Members opposite that if he and they believe in laissez faire and in no controls, if they believe in fiscal policies and social policies which, in effect, rule out the possibility of an understanding with the trade unions, then it is quite logical to draw the conclusion which the right hon. Gentleman drew. It is the logical Tory line.
We have always said this. I said it myself as recently as last July in the debate on inflation. I said:
The truth of the matter is that hon. Members opposite have believed—I do not doubt that they have believed very sincerely—in a free economy. 'Conservative Freedom Works' was the great slogan of the last Election. Is Conservative freedom going to solve the problem of inflation? I believe that there is only one way in which it can. If you have a free-for-all and a free economy, you can prevent continuous inflation only if you create enough unemployment to prevent the inflationary forces really getting to work.
I went on to say:
Logically, what they should do is create enough unemployment to weaken the unions, never mind the cost in industrial disputes, in order to prevent the pressure for higher wages and in order to reduce the share of labour in the national product. But they dare not face that, because they know the political consequences."—[OFFICIAL REPORT, 25th July, 1957; Vol. 574, c. 715–7.]
As I have said, we do not accept what the right hon. Gentleman believes. We believe that his analysis is wrong, and we think that his policy is a counsel of despair. We think, contrary to him, that

it will lead to disastrous results for our economy. I want, as I must, to explain to the House just why we sincerely think all these things.
First, we disagree with the right hon. Gentleman—and with anyone who agrees with him—about the causes of the price increases in this country since the war. If we compare the period 1946–51 with the period 1951–57, we find in each case that the rise in retail prices is about one-third, but whereas, in the period 1946–51, import prices doubled, in the second period, 1951–57, import prices fell by just about 9 per cent.
What is the significance of that? It is, of course, that despite the appalling difficulty of rising world prices when we were in power, we managed to hold back—to some extent, at any rate—the impact upon our home price level. And the second and inescapable conclusion—[Interruption.] I would ask hon. Members to follow this argument—in that second period is that something was done here, at any rate, not abroad, but here at home—

The President of the Board of Trade (Sir David Eccles): Which provoked devaluation.

Mr. Gaitskell: As the right hon. Gentleman knows very well, if devaluation had affected anything it would have increased import prices, but they fell.
The Government of the time decided deliberately on a number of measures which themselves pushed up prices. They cannot deny that. They slashed, virtually abolished, the food subsidies, they increased the insurance charges, and finally, of course, in the last period they introduced the Rent Act. These things were bound, of themselves, not only to affect the price level but to provoke wage claims to make up for that. Therefore, what we on this side of the House will not have is the statement that the trade unions were responsible for the rise in prices.
Another point that I would make in commenting on the price situation is that we do not believe—at least, I do not—that the cause of the trouble in this post-war period has, in the main, been what is called a demand inflation; too much money chasing too few goods. The main reason, and the former Chancellor thought this—and said it as recently as


last July—is a cost inflation; in other words, the wage-price price-wage spiral with which we are all so familiar. I think that one of the fundamental weaknesses of the right hon. Gentleman's case is that he seems to have changed his mind on that, and is wrong in doing so.
The second main reason for our disagreeing with him is that we think that he is wrong about the nature of the sterling crisis this summer. This was not caused by any weakness in the United Kingdom balance of payments. We had a strong balance of payments position then. Thanks to the change in the terms of trade, we shall probably have an even stronger one this year. What it was due to, in our opinion, was an attempt to run the sterling area with increasingly relaxed controls so that, today, they virtually do not exist at all—with a wholly inadequate gold reserve.
We really cannot overlook, in studying the record of the previous Chancellor, the big contribution made to that crisis of August by the so-called "leak" through the Kuwait gap; that is to say, the transfer of capital owned by British residents here from this country to the United States and to Canada to the tune of about £100 million to £150 million. We believe that the major cause of that crisis was really the relaxations in foreign exchange control which have taken place gradually ever since 1951, such as the approach to convertibility when we were not ready for it.
Things like the possibility of foreigners financing dollar imports through this country are bound to place a very great stress on the sterling exchange. And failure to agree with our partners in the sterling area as to what the claims on the dollar pool are to be is another thing that places a strain on it. The complete freedom that existed for people to export capital is another such factor. It is such things as those, far more than anything happening in the United Kingdom that are really responsible.
Our third reason for disagreeing with the right hon. Gentleman is that he fails to realise that the key to the whole situation is production. The really serious thing—surely hon. Members must understand—in the last two years is that there

has been no expansion of production in this country whatever. That is in sharp contrast, I may add, to what has happened in other countries. The figures have been given before, but they are worth while repeating, because we must understand how serious this is.
These are the United Nations figures. Since 1953; output—industrial production—in Western Germany has risen by 46 per cent.; in Italy, by 41 per cent.; France, 40 per cent.; Norway, 27 per cent.; Holland, 26 per cent.; Sweden, 18 per cent.; and in Great Britain it has risen by 16 per cent. That is to say, our industrial production has risen at about only one-third of the rate of increase in Germany and less than half the rate of increase in Italy and France. Incidentally, at the same time, during this period the rise in the cost of living has been in the opposite direction. It has been higher here than in any of the other countries that I have just mentioned—

Sir Godfrey Nicholson: What about the French situation today?

Mr. Gaitskell: The French situation is serious because of the Algerian war, and no wonder; but one cannot get away from the fact that the underlying situation France, because of the figures I have just quoted, is not as bad as appears at first sight.
There are two vital consequences which are ignored when one overlooks production. The first is, quite simply, this. What matters when we are talking about cost inflation is not the level of wages, but the level of wages in relation to productivity. We all agree with that. But if that is the case it is labour costs that matter, and it surely follows that if there is no increase in productivity—and we will probably get an actual decline in productivity when production falls then any rise in wages whatever puts up labour costs.
If, on the other hand, we have a rise in productivity of, say, 3 per cent.—a reasonable figure, or 4 per cent. or 5 per cent.—we can, of course, afford rises in wages without any increase in prices.
Why is it significant? It is significant because if one adopts a policy which reduces and checks production one makes the problem of wages more difficult.
The second simple point is that if we have a rising production we have rising


revenue, and we have a much easier budgetary situation to deal with. Of course, there always have to be priorities in any Budget discussion, but it is a great deal easier to settle those priorities, if every year, automatically—and in real terms—the revenue increases by, say, £300 million or £400 million. Therefore, we say that it is the cardinal weakness of the right hon. Gentleman's approach that he ignores these basic facts about production and its significance.
I must now refer briefly to the immediate situation. Last September, I said that I thought that there was a very real prospect of a minor trade recession. I was laughed at. Many people said that I was alarmist, was unnecessarily spreading despondency, and so on. But does anybody really say now that I was wrong? Look at the American situation. Money incomes are falling in the United States. Industrial output has already declined by 7 per cent. Unemployment is up to 5 per cent., meaning that 3½ million people are out of work. Steel is running at 60 per cent. of capacity. If I had time, I could quote any number of other figures.
Commodity prices, for instance, to which the right hon. Gentleman referred, are continuing to fall. This has two effects. The terms of trade have moved in the most startling manner in our favour, to the tune—estimated recently—of no less than £400 million a year; a bonus, as it were, to our balance of payments. But, of course, the second effect is the check to our exports. One need not look very far to see it. India, France, New Zealand, Holland, Australia and South Africa are all imposing restrictions upon our exports. It is bound to become harder and harder to export in a world suffering from a minor trade recession. It will be very hard indeed, by reason of deflation and the cutting down of home demand, to force labour, materials and capital into the export market in present circumstances. The effect in these conditions, therefore, of further cuts is almost certain to be nothing but waste and unemployment.
I agree with the right hon. Gentleman that the unemployment situation is not yet very serious, but there are 40,000 more people out of work now than there were a year ago. There are 43,000 fewer

vacancies. In fact, the number of vacancies—apart from 1952, which was a year in which production fell by 3 per cent. in this country—is the lowest for ten years. Industrial building prospects continue to decline. Factory approvals are at their lowest level since 1953. Does anybody think that, with a rate of interest of 7 per cent., private house building is likely to flourish? We all know what the Minister of Housing and Local Government is doing to council house building. It is not surprising that serious people in the building industry are talking about 100,000 unemployed in that industry by the spring.
It is the same story in the other industries affected. The order books of the machine tool industry are falling; down to nine months now, whereas they were eleven months when I spoke before Christmas. There will next year be excess capacity in the steel industry. Tinplate works are closing down in South Wales. I heard only yesterday that Stewarts and Lloyds' tube works, in Northamptonshire, is going on short time. "It is quite clear that unemployment and short-time working are likely to spread in Britain this winter." These are not my words. They are quoted from the Economist of 18th January.
I have no desire to exaggerate the position, and I have never done so. [HON. MEMBERS: "Oh."] I thought hon. Gentlemen would know that I realised that it was rather unwise to exaggerate the position; apart from anything else, it is not wise to exaggerate, and it is not necessary to exaggerate it, because all I am trying to prove is that it is nonsense to say that the British economy is overstrained at present. It is not. It has been stagnant for two years. Investment has increased. There is excess capacity, and we ought to be expanding now.
Our last reason for disagreeing with the right hon. Gentleman is that, even if this were not the case and even if we were, so to speak, producing full out and there were a more serious budgetary and financial position, we could not accept that social service expenditure must always come into the firing line. It is utterly wrong, in our view, after the right hon. Gentleman gave away £35 million to Surtax payers, which concession itself followed an increasing


burden upon poorer people through higher insurance charges, for him thereafter even to discuss with his Cabinet further attacks on the Welfare State. We cannot accept that one has to look at Government expenditure alone. One must look at the whole budgetary position. We are not prepared to put tax concessions to the rich in front of the benefits which the poor ought to have, and do have, from the Welfare State.
It is right and fair that I should say more precisely, if I can, what we think should be done in these circumstances. I have never said, and I do not think that anybody could say, that there is a simple "gimmick" answer to the problem of inflation. Of course, it is a very complex problem, a problem of economic and social relations, of human behaviour. Equally, I do not think that we, in opposition, can reasonably be asked to give in great detail exactly what we should do if we were in power at a given moment. One cannot forecast, in opposition, what one's Budget would be in a year or two years' time; one does not know what the economic situation will be. It is very uncertain at the moment. But what we can give, and what I think the House and the country is entitled to hear from us, is what our general answer is in this situation. I will try to give it and show that it is an answer very different from the previous Chancellor's logical, Tory answer.
Our answer flows in large measure from our criticisms. We believe that the object of monetary policy should be expansion and full employment. It should be to maintain enough monetary demand to ensure those things, though not more than to ensure them. If production is not expanding, prima facie that is a reason not for tightening but for letting up, so far as production is concerned. If one is worried about the effect of expanding production on one's balance of payments position, there is no need to be frightened; one can use import controls as a temporary measure. We still use them, as hon. Gentlemen know, on a number of dollar imports. The Government use them, and other countries use them continually. There is nothing really wrong about using import controls if thereby one can hold one's balance of payments and, none the less, continue with industrial expansion.
We cannot accept—I want to underline this—the pre-war situation in which we had in this country, a not disastrous balance of payments situation—though it was not a very good one—because, and in so far as, we had 2 million unemployed. That really is not open to any serious Government today. Certainly, we should not dream of contemplating it.

Mr. Osborne: Nor do we.

Mr. Gaitskell: I am glad to hear it. If that is the case, hon. Gentlemen opposite must accept the logical consequences. One of the consequences is the readiness to apply import controls, if necessary. Another is the readiness to apply investment controls, if necessary. It is all very well to dismiss them and say that one can really do nothing with them. We had them for a number of years, and they did work.
Next, I wish to emphasise that, with rising productivity, one can, of course, afford wage increases; but they must be within bounds. We all agree about that. Is it really so difficult to reach agreement on this sort of thing? I suggest that the first rule to apply is that the Government should refrain from provoking wage increases. Doing what the Government did between 1951 and 1957 is bound to produce bad consequences. More positively, I would say to the right hon. Gentleman that he must seek understanding with the unions on the basis of all round restraint relating to all incomes—dividends, salaries, and everything else. It is not enough just to appeal to them, if I may put it so to the Chancellor of the Exchequer; he must get round a table with them and say, "Now, under what circumstances do you think it would be possible to have some measure of restraint?" The kind of policies which can be followed must be discussed.
This brings me to the matter of social policies. If the Government go ahead with a Rent Act, as they have just done, if they proceed to play about with education as they are doing through the block grant scheme, of course, they will get an adverse reaction. If they refuse to tax the people who ought to be taxed, namely, the people who make the heavy capital gains, there will, of course, be a hostile reaction.
The plain fact is that the House and the Government ultimately will have to choose between voluntary restraint with expanding production, which must be negotiated in some way, or compulsory restraint with stagnant production. The latter is really what the right hon. Gentleman is arguing for. We want the former.
In all this, of course, we are left in the dark as to exactly where the Government stand. We do not know whether they are going to follow the Lord President of the Council, the acting Prime Minister, or the Chancellor of the Exchequer. We are not much clearer since the speech this afternoon. We still know nothing as to their attitude to the social services. We do not know whether, for instance, the Chancellor adheres to the very rigid doctrine on wages supported by the previous Chancellor. Does he intend to take a different view, for instance, of the application of the Health Service employees? We do not know his attitude to investment or his outlook on the recession.

Mr. Ellis Smith: Or on war expenditure.

Mr. Gaitskell: We do not know anything about the Estimates for this year, but we hope to hear something there, at least, fairly soon.
It seems to me that the Government are faced with two possible courses. They can do what undoubtedly the great bulk of the Conservative Party would like them to do—that is, to follow the former Chancellor of the Exchequer. There is no doubt about that. He has got his party with him. That is abundantly clear from all the reports in the country. We know the consequences if the Government do that. Certainly, we shall resist to the utmost the kind of policy that the right hon. Gentleman wanted to carry out. I do not think that it will be very easy in industry either.
The alternative, which, no doubt, would be favoured by the acting Prime Minister, is the muddle-through, but that will not help them either. They would have to go all the way that we propose to go. Merely to hesitate with the right hon. Gentleman's policy and to shrink from applying it would simply mean choosing inflation instead of unemployment. Depression may save the Government for a time from confronting it, but it will not eliminate the very real dilemma which

lies at the heart of these resignations and which faces any Conservative Government.
One thing which is quite certain is that the Government and the party opposite are divided on this issue—some Members opposite are quite honest enough to realise that. They are discredited in the country. They are, without doubt, moving to electoral defeat. They have lost the confidence of the country. While they stay in office, not only our economic policy but our foreign policy is paralysed. We lose chance after chance of seizing the initiative in world affairs and at home their economic policy is, at best, uncertain, shifting and weak and, at worst, calculated to stifle our energies and divide the nation.
I say to the Government frankly that it is time they went. It is wrong for the country that they should stay. They are tired, troubled men. Let them cling to office no longer. Let them take their rest and let the people choose a new Government.

5.23 p.m.

Mr. Peter Thorneycroft: The House, which understands about these things, is sometimes a little tolerant to people who speak in my position. Hon. Members know that this is not an easy speech to make. It will have the one merit—and perhaps the only one—that it will be a very short speech.
I have already said everything that I had to say about my reasons for resignation in a letter which I wrote to my right hon. Friend the Prime Minister and in a speech which I made to my constituents in Monmouth. I have no wish in any way to add to or detract from what I said on those occasions.
What, it seems, matters now is not personalities; it is not why I resigned or why my right hon. Friend the Member for Flint, West (Mr. Birch) and my hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) resigned at the same time. What matters now is the future. I therefore want to speak for a few moments in this debate to support the Motion, which, indeed, seems to be couched in quite unexceptionable terms, and to say something about what I regard as the basic economic problem of the country. I can say it very shortly.
I can claim to say it without rancour or recrimination and from an experience of six years as an economic Minister. Indeed, it may be said that having been for six years an economic Minister, I can share some of the blame for some of the problems that exist. That will not bother me at all, because it may well he that no party and very few people in this country could escape all responsibility for bearing some share of the economic problems that face us at the present time.
The point I want to put is the quite simple one that for twelve years we have been attempting to do more than our resources could manage, and in the process we have been gravely weakening ourselves. We have, in a sense, been trying to do two things at the same time. First, we have sought to be a nuclear power, matching missile with missile and anti-missile with anti-missile, and with large—I am not suggesting that economies have not been made—conventional forces in the Far East, the Middle East and the Atlantic at the same time. That is one branch of endeavour which we have attempted. At the same time, we have sought to maintain a Welfare State at as high a level as—sometimes at an even higher level than—that of the United States of America.
We have been trying to do those things against the background of having to repay debt abroad during the next eight years of a total equal to the whole of our existing reserves; against the background of having to meet maturing debt in this country next year at a higher level even than the very high level of business; against the background of seeking to conduct a great international banking business and against a background of sustaining our position of one of the world's major overseas investors. In those circumstances, it is small wonder that we find some difficulties.
I do not deride the men, nor do I invite anyone else to deride them, who urged large expenditure in all these fields. It is not a mean thing to wish to be independent in nuclear power of both the East and the West, although it may be that in the West in future no one really will be independent in nuclear power. It is not a mean thing to attempt that or to attempt to have the great conventional forces to match our world-wide responsibilities. It

is not a mean thing to advocate and seek to sustain a Welfare State which stretches from education to health, from family allowances to old-age pensions.
Those are not unworthy aims, but let no politician, of any party, be under any illusions as to what all this has meant. It has meant that over twelve years we have slithered from one crisis to another. Sometimes it has been a balance of payments crisis and sometimes it has been an exchange crisis, but always it has been a crisis. It has meant a £ sterling which has sunk from 20s. to 12s. That is not a picture of the nation we would wish to see. It is a picture of a nation in full retreat from its responsibilities. That is not the path to greatness. It is the road to ruin.
I am not here to criticise my colleagues, or indeed my political opponents. Indeed, if we look back we see no Chancellor has been wholly successful in this—Sir Stafford Cripps, for all his courage and conviction, the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell), and my right hon. Friend the Lord Privy Seal who is to reply to this debate, I myself. There is no man who would say he had won in this particularly difficult and desperate battle. Now my right hon. Friend the Chancellor is in charge of these affairs. I know that I myself wish him well, and I believe the whole House and the country wish him well, in the task which lies ahead of him, but he might just ponder for a moment why it is that his predecessors—and heaven knows, they tried a wide variety of policies—have so far failed.
I would say in all humility that I do not believe the problem is technical at all. I do not believe it lies in an answer to the question whether we should use Bank Rate or physical controls. To tell the truth, neither of them works very well. The Bank Rate is only one part of a very much more complicated monetary mechanism, and physical controls are well known to crack under any real pressure. The simple truth is that we have been spending more money than we should. That is the simple truth. If I may attempt a metaphor, it is not the sluice gate which is at fault. It is the plain fact that the water is coming over the top of the dam.
Our basic problem, whether it is in the Welfare State or whether it is in arms, or


whether it is in both, is that we should plan to spend less than we are planning to spend at the present time, and unless we do so the £ sterling will continue to decline in value. Nothing else will serve. Higher taxation? It has already reached a point where I should think most men would admit it is inflationary in its effect. A buoyant revenue, which is a comfort so often extended to a Chancellor of the Exchequer, is a reflection of and not a cure for inflation. A new method of paying for the social services may well be right, but it is only a new form of taxation in reality.
It is not that there is not agreement about the aim. We are all agreed about the aim. Of course we are. Any hon. Member in this House would say he was against inflation, as men say they are against sin. The question is where and when we choose to stand and fight it.
All I want to say is this. I believe that there is an England which would prefer to face these facts and make the necessary decisions now. I believe that living within our resources is neither unfair nor unjust, nor, perhaps, in the long run even unpopular. There are millions of men and women in this country, in the Commonwealth, and in many other countries of the world who depend for the whole of their future on sustaining the value of our money. Self-interest and honour alike demand that we should take the necessary steps to hold it.
The right hon. Gentleman has my full support. My resignation will not have weakened his hand in what he has to do. But he has something more than my support. I believe he has the willingness of many people in this country to put the battle against inflation first, to face the truth, however hard the truth may be. He has an opportunity. With all my heart I wish him well in it.

5.35 p.m.

Mr. Arthur Holt: The House has listened to a very courageous speech. It was one of the most honest speeches it has been my privilege to listen to in my short period in this House. The present Chancellor of the Exchequer when speaking today said—and I think his words were these—that the present situation had left his colleagues surprised and perplexed. Not only are his colleagues surprised and perplexed by the situation which has occurred with the

resignation of the former Chancellor of the Exchequer: I believe many in the country are still baffled by it. Possibly the speech which the late Chancellor has made today may help to clear up some of the perplexity and bewilderment in the country.
The right hon. Gentleman went down to his constituency and made a very clear statement of his views, but he indicated at the same time that it was not his intention, apparently, to carry his views in any campaign either quietly in the Tory Party or in the country, and I think that what has baffled the country, as to some extent it still perplexes me, is whether the argument in the Cabinet was between policies which would bring about varying degrees of success, or whether it was an argument about policies which the late Chancellor believed would result in failure, whereas he believed his policies would result in success.
It is most important that the country should be told very precisely which of these two it was, for if it was merely an argument about degrees of success many people will wonder whether the late Chancellor was justified in resigning, for, after all, if there would have been some success from the policies recommended by the rest of the Cabinet, at least he would have had the honour of being the first Chancellor to preside over success in handling the problem of inflation since the war. On the other hand, if the argument was between policies, between those advocated by the Cabinet which in the opinion of the late Chancellor would result only in failure, and his which would result in success, a very different situation arises.
I remind the right hon. Gentleman of words he used in his speech at Newport, where he referred to the last crisis in September, and said that had it not been checked it could have led to the economic disintegration of the Commonwealth, and that it could have resulted in irreparable injury to the economy. The right hon. Gentleman used similar words this afternoon when he said that since the war we have been going along the road to ruin. This is not some small matter. This is a matter which I believe the country wants solved.
If it is the case that the late Chancellor is convinced that his policies alone would have stopped us going along the


road to ruin, can he really say in his conscience that he must now take a back seat on the Conservative Party benches and do no more about it? Can he really sit there and mildly give support to a Cabinet which he is convinced is pursuing economic policies that will continue to take the country along the road to ruin? I am not the keeper of the right hon. Gentleman's conscience. I do not wish to be its keeper, but it is only fair to put to him that this is why so many people in the country are baffled.
It is not an easy matter for an hon. Member of any party to resign a great office, such as that which the right hon. Gentleman has resigned. It is perhaps an even more difficult thing to carry on one's campaign either privately within the party or outside in the country, but if the right hon. Gentleman is convinced that the policies with which he disagrees will lead the Government along the road to ruin he should at least consider again, on behalf of the many people who think as he does, whether he should not take more active steps to convince the country that he is right.
I am convinced, and I believe that my party is convinced, that, to use the words of the hon. Member for Flint, West (Mr. Birch), the campaign against inflation must be won. We must not just go on fighting it year in and year out in a rather easy-going way, as has been done in the last ten years. The campaign must be won, and I am convinced that the country, having been taken as far as it has been by the late Chancellor along the road to winning it, will be furious if it finds again that the battle is not won because of the weak and shilly-shallying policies pursued by the Government.
Let there be no question about it that there will be retribution. It will be a scandal of the first order if, after all the attempts to get the trade unions to moderate their wage claims and to get everybody else to moderate their demands on the economy, at this vital, crucial moment the Government again weaken in their policies, as they have done on so many occasions—and not only this Government but other Governments in the last ten years.
If any criticism can be made of the speech of the right hon. Member for Monmouth (Mr. Thorneycroft) it is that

he was not strict enough, if that is the right word to emphasise the matter about which we are so concerned. We are convinced that this problem of inflation will not be solved without a considerable reduction in Government expenditure, followed later by a reduction in taxation. There can be no doubt that at present the height of taxation alone is an infringement of personal liberty. It is an encouragement to waste and a discouragement to industrious people.
It makes the achievement of a surplus for investment abroad, and particularly in the Commonwealth, extremely difficult. In that respect, if there is to be any relaxation of tension abroad and any softening in the rigidity of the attitudes which are being taken up between East and West, they can be brought about only by trying to move the cold war on to the economic front and by Britain having a greater surplus to invest in the backward countries of the world, to raise their standard of living and to remove the causes on which Communism and the like grow so rapidly. That will never be done while we go on sublimely pretending that this or any other Government can continue to take a huge proportion of tile wealth of the nation to themselves, as they do today.
The new Chancellor of the Exchequer indicated that there had been a reduction from 33 per cent. to 27 per cent. in the proportion of the total national income taken for expenditure above the line. That is not good enough, because taxation has been taken, particularly this year, to cover nearly the whole of expenditure below the line as well. The Chancellor also left out the £400 million taken by local government expenditure. I believe that the proportion is still near 40 per cent. of the national income, and that is an amount which the country just cannot afford.
There are many problems in connection with the reform of the Welfare State. If we can find other ways and means of financing many of the things that we want to do, they must certainly be sought out, but there is a problem which can be faced and dealt with now. It is the problem of defence. I do not wish to read anything into the remarks which the right hon. Member for Monmouth made about our being a nuclear Power, but my party said over a year ago and has repeated it


this week, and I repeat it now, that it is an utter waste of money for the country to try to set itself up as a nuclear Power in its own right.
This is no pacifist line. We are in no sense less concerned than others to keep the solidity of the North Atlantic Treaty Organisation. That is an essential part of the defence of the West, but it is an utter waste of money to duplicate the great, massive deterrent which is already possessed by our American allies. If we only recognise this, if we do not go in for our own nuclear bombs, if we review again the suggestion that we should have missile bases in this country—which we in the Liberal Party think are also nonsense—a large sum of money can be saved. I would put the figure at between £200 million and £250 million.

Mr. Beresford Craddock: Does the hon. Member mean to suggest that our defence policy, on which our foreign policy depends, should depend entirely upon the armaments possessed by the United States?

Mr. Holt: No. I should have thought that the policy of interdependence meant that each country made its own contribution to the full defence of the West. All I am saying is that I see no advantage in that climate for us to duplicate something which is already being done by America, and done more effectively.
I cannot feel that there is any realism in the attitude taken last June by the Leader of the Opposition, much to my surprise, when he said on behalf of the Labour Opposition that he felt it was necessary to have our own atomic or hydrogen bombs in case at some time America left us on our own. The right hon. Member for Ebbw Vale (Mr. Bevan) has talked about going naked into the conference chamber. I feel that it in no way strengthens us as a useful ally in N.A.T.O. to have a bomb which is possessed already by the United States.
There are other items of expenditure which I have discussed before, and I am ready to do so again, but I do not want to delay the House further. I will make again the point that it will be a tremendous shock to the country, and one to which there will be a grave reaction, if this Government now weaken on the policy they adopted recently of trying

to kill inflation. No words of the Chancellor or even the Leader of the House tonight will reassure people on this point. It is only their actions in the ensuing weeks which will speak, because actions speak louder than words. I hope, for the good of the country, that the Government will resolve firmly to continue to wage the battle against inflation, and to win it.

5.52 p.m.

Sir Roland Jennings: I rise for only a few minutes in this debate because so many other hon. Members wish to speak on this important day. First, I want to congratulate the new Chancellor of the Exchequer on his speech this afternoon. I have seen many Chancellors and I think my right hon. Friend has got a good grip of the position in a very short time. He has a most unassuming way of saying what he has to say, and that will ensure him success. I assure my right hon. Friend that as long as he and his Cabinet are determined to stem the deterioration in the value of the and to stabilise our economic position, millions of people in the country, who do not understand the details we are discussing today, will be behind the Government and will support them. After all, if the £ goes and our economic situation deteriorates, there will be deep regrets on the opposite side of the House as well as on this side, because our whole industrial structure will go west and we shall be a downtrodden nation. So let there be no mistake on the opposite side of the House.
The Leader of the Opposition made what I thought was a dismal speech. I am not one who likes to be despondent about anything. I was glad to hear the Chancellor say that he is determined to tackle the situation. I was glad to hear the ex-Chancellor give what I might call a very patriotic explanation of his own position. The right hon. Member for Monmouth (Mr. P. Thorneycroft) has the admiration of all Members of the House for the way he spoke and on the decision he reached. That is the spirit we want in the country. We want a determined effort to unite with one thing in mind, that is, the safeguarding of the country's economic structure.
At the present time there are certain suggestions for increases in wages. I am one of those who believe that we are


spending far too much on our nationalised industries and that they are getting away with murder, particularly the coal industry. I would like to see the Government initiate an inquiry into those industries in order to be able to tell the country exactly what is happening. I am certain that there must be tens of thousands of people who suspect that there is bad administration and, therefore, a great deal of waste in those industries.
I know it is easy to criticise and I realise, without knowing all the details, that one might be on dangerous ground. Nevertheless, if the Cabinet and the Government as a whole will tell the people exactly what is happening, and will continue during the next few months their determined efforts to stabilise the £ and to safeguard our economic future, I am certain that the mass of the people will be behind them, and I will give them my full support, as will all other hon. Members on these benches.

Mr. Stan Awbery: Is the hon. Gentleman aware that during the past five years the value of the £ has dropped from 20s. to 15s. under a Tory Administration?

Sir R. Jennings: Yes, but is the hon. Gentleman aware that the beginning of that deterioration was under a Socialist Government, when they were throwing away millions of £s?

5.56 p.m.

Mr. Frederick Mulley: I was surprised to find the hon. Member for Sheffield, Hallam (Sir R. Jennings) asking if the £ goes, what then? His right hon. Friend had just told us that the value of the £ has dropped since the war from 20s. to 12s. and, as my hon. Friend the Member for Bristol, Central (Mr. Awbery) mentioned, a great part of that occurred during the Conservative Administration and at a time when world prices were falling, whereas in 1950 to 1951 we had to meet a steep rise in the price of imported raw materials. But to pursue that argument would not be profitable in this debate, and so I will concentrate on one aspect of the problem.
First, I want to say to the right hon. Member for Monmouth (Mr. P. Thorneycroft) that those of us who have had the pleasure of crossing swords with him

across the Floor of the House in the years in which he held the high offices of President of the Board of Trade and Chancellor of the Exchequer have always respected both his sincerity and his courage, and we have enjoyed the courtesy that he has shown us in debate. That sincerity and that courage have never been more clearly shown than this afternoon in a most remarkable and impressive speech. If I go on now to criticise what the right hon. Gentleman has said, and the stand he has taken, it is not because I do not appreciate the sincere remarks he made this afternoon.
The right hon. Gentleman is right in saying that the country has been trying to do too much since the war, but I do not think he recognises that the policy he would have us pursue would mean that the country would not be doing as much as it could do, because that policy would lead to the unemployment of some of our resources and to failure to invest when I think we ought to invest. I suggest that the difficulty of the right hon. Gentleman and of the present Conservative Administration in general is that they approach the problem rather like Mr. Micawber. They approach it on the basis that the national income is fixed. I was indeed surprised to find the Lord President of the Council differing from his right hon. Friend. One does not expect the right hon. Gentleman to know much about economics, but one might have thought that he knew the right economic policy of Mr. Micawber, since evidently in his political philosophy he shares very much the same kind of approach. He, too, believes that something will turn up.
That is the essential difference between us. We claim that an expansionist economy would so increase the level of output and the level of the national income that a great number of these problems would solve themselves. I will try to illustrate this briefly. I do not believe that under the Conservative economic policy we can have both full employment and a stable £.
I believe that the right hon. Gentleman took the decision that he could not have both, so he was prepared to sacrifice full employment. Having taken the preliminary steps to that end in September, he was entitled to be somewhat surprised and dismayed when his colleagues, perhaps not seeing as clearly as he did the direction in which his policy was


leading, a few weeks ago pulled back. That is the choice we have to make. The right hon. Gentleman's policy was a return to 1931, to the economic philosophy of the 1930s, and it all arose because, deliberately and for doctrinaire reasons, the Conservatives surrendered the control of the economy. We cannot possibly have full employment and steady prices, unless the Government are in control of both investment and consumption.
What have the Government done? We must stress that the present crisis is one which has happened after seven years of Conservative rule. It is not, as used to be said, a case of the Conservatives coming in to clear up the mistakes of the preceding Socialist Administration. The country must realise that the mess in which we now find ourselves is a mess of the making of not only the right hon. Gentleman, but also of his predecessors. He generously acknowledged his share of the responsibility for the present situation. The major errors they made were losing control of the £ by relaxation of exchange control, which led to the Kuwait gap and to other loopholes by which unpatriotic people were prepared to buy foreign securities, particularly American securities, probably losing us in the last twelve months £150 million to £200 million.

Mr. Frederick Gough: The Leader of the Opposition also mentioned the Kuwait gap as though that were something which came about in the last year or two. It was there all through the Socialist Administration, and the Socialists did nothing about it.

Mr. Mulley: I do not want to spend a long time dealing with the technicalities of exchange control, but it was the 1955 relaxation which permitted this particular infringement. If it existed before then, it is surprising that the hon. Gentleman's shrewd friends in the City took so long to find it. I am sure that it was the relaxation of 1955 which opened up this possibility.
It was also in 1955 that we had the electioneering Budget followed by a recession in the autumn. Hon. Members opposite should try to understand that taxation cannot be reduced in advance. Taxation can be reduced only when the economic system so permits. There is no evidence that reduced taxation, particularly Income Tax and Surtax, leads to increased productivity.
By the so-called credit squeeze policy, the Government handed the direction of the economy largely to the Bank of England and the joint stock banks. It is fantastic that essential investment decisions, and so forth, are not directed or in any way controlled by the Treasury, but are left to the managers of the respective banks—fundamental decisions affecting the prosperity of the country. It was staggering to read recently that in the September crisis, when it was clear that some action had to be taken, nothing could be done because the Governor of the Bank of England was on holiday. What kind of Government have we when they surrender control and now talk about about the battle of inflation? They must learn that if they are the Government they must govern.
The credit squeeze has been a grotesque failure. Although on paper the level of bank deposits is 98 per cent. of what it was in 1950, the recent figures given by the chairman of the Midland Bank show that the volume of business turnover, the flow of income, has increased by 51 per cent. On has to look not only at the average level of deposits, but at the number of times those deposits are used to see what success a Government have had in their credit policy. The turnover of deposits has increased by 50 per cent., which is equivalent to an increase of 50 per cent. in bank deposits with turnover steady.
The final surrender was the 7 per cent. Bank Rate and the so-called tough attitude to wages, with the refusal of a reasonable increase in the Health Service and the enigma as to how a 3 per cent. increase for workers earning less than £1,200 a year was inflationary, while an increase of 5 per cent. for workers earning more than £1,200 a year in the same industry was not.
It all boils down to showing that last September it was clear that the right hon. Member for Monmouth, quite sincerely I believe, was determined to go back to the 1931 approach. His colleagues found out only in January. They saw the red light and pulled out. What his colleagues do not see—and I think that the right hon. Gentleman will probably agree with me on this—is that there is no alternative to his policy if one wants a stable £, unless one comes to our policy which involves economic planning, direction of


the economy and concentration on expansion. Full employment and stable prices are impossible without economic planning, which the Government have surrendered. One cannot have both in an unplanned private enterprise economy. I think that privately the more responsible Members and supporters of the Government will agree that the old slogans of "no controls", "private enterprise", and so on, are things to be saved for electioneering meetings.
The alibi which the Government have tried to develop for avoiding the responsibility which is entirely theirs is to put the blame on wages. What are the facts about the alleged irresponsibility of the trade union movement? Let us briefly consider the position about the number of days lost due to industrial disputes. In the United Kingdom from 1947 to 1954, 151 days per thousand workers employed in industry were lost as the result of disputes. That figure is only one-tenth of that for the United States of America, only one-eighth of that for France, and, rather surprisingly, only one-fifth of that for Japan. In 1955, the number was 163, but the provisional figure for 1956 is only 95. In international comparisons of time lost through trade union and unofficial disputes we have as good a record as any country and better than most.
What is the position about wages? The average figures given in The Times last November for the period 1948–57 are very revealing. In the ten years the average real wage rate increase per annum was only ½ per cent. If it is said that wage rates are only part of the story, the actual increase in real earnings over the same period was only 2·6 per cent. per annum. Of course, there have been certain hold-ups in wages these years, but in the last five years of that ten-year period the average yearly wage increase was 2·6 per cent. and for earnings the figure was 4·1 per cent.
Are those figures so extraordinary? In a properly planned economy could we not achieve at least the 2·6 per cent. per annum increase in production necessary to cover the increase in real wages without any inflationary effect? Could we not get even the 4 per cent. necessary to cover earnings? One has to recognise that there was exceptional pressure on trade

unions over that period for wage increases, with the reasons for which my right hon. Friend the Leader of the Opposition dealt in his admirable speech. Also in the last five years, the increase in prices has been against a fall in world prices.
Another factor which I would ask hon. Members opposite to face is that, for a considerable period in the last ten or twelve years, wage increases have been pushed up, not by the trade unions, but by the employers. In industries in which there has been a scarcity of labour, employers have been bidding against each other well above the negotiated trade union wage rates in order to steal workers from one firm to another. Who can blame the trade unions when they want to get negotiated rates at the levels which most employers are offering?
Against this background of a deliberate policy on the part of the Government to raise the cost of living in many directions and the pressure on the part of the employers to drive up wages, the total earnings for the last five years were only 4 per cent. higher in real terms per annum, and, for the last ten years, only 2½ per cent. higher.
I submit that the whole of these wage increases and much more could have been covered if only the Government had decided on and had succeeded in maintaining the level of output, and an annual increase in productivity approaching the level which the Labour Government achieved in their term of office immediately after the war, when, for many reasons, this increase in productivity was much more difficult to attain.
What would such higher productivity mean now in the present financial situation in terms of the Estimates and the forthcoming Budget, which we have discussed so much? I can see that at least it would mean, at a conservative figure, a further £1,000 million in the national income. Had that increase in productivity been maintained, the Chancellor would have another £500 million in his coming Budget at existing rates of taxation, which is ten times the sum of the £50 million which appears to be at the centre of the argument.
We say that if we got this increased production, then the tax reductions could come, but instead of concentrating on


productivity, the present Government have wavered between full employment—they had a go at that for the 1955 election, and did a bit about the cost of living—and have fiddled around trying to increase production, never being quite clear what they are doing.
We can and we shall, by expanding the economy, achieve both full employment and stable prices, but this can only be done by economic planning. The Government have clearly shown that the choice under their system is always between a stable £ and full employment. They cannot, whether they want it or not, possibly have both, and I believe that the logic of this argument and that of the ex-Chancellor's policy will not be lost on the electors when they vote in Rochdale, and when, as I hope, they have the chance to choose all over the country in the very near future.

6.14 p.m.

Mr. Martin Lindsay: As far as I am concerned, the day on which we read in the papers that three Treasury Ministers had resigned, and their reasons for doing so, was one of the unhappiest that I can remember. As I wish to speak for only a short time, I do not propose to repeat the various arguments which we have read throughout the last two and a half weeks.
I take my stand and base my thinking on three factors which I think are incontrovertible. The first two were mentioned by my right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft) in his very remarkable speech—firstly, the recurrent financial crises which we have had ever since the war, in which each time Britain has been within measurable distance of going down, and, secondly, the fact that they were due to our having tried to do too much.
That leads me to the third, which I think is equally incontrovertible. It is that if our difficulties are due to the fact that we have been trying to do too much, then, surely, the answer is that we must try to do less, or, at any rate, no more. That, of course, was the reason why my right hon. Friend sought to have next year's Estimates reduced to the level of this year's expenditure, and, for my part, I think he was right.
In the debate on 31st July, some of my hon. Friends may remember that I was then asking for the same sort of tough

economic policy that the Government introduced on 19th September. A few of my hon. Friends will remember that I could not see my way to vote for the Government on that occasion because there seemed to be no certainty that we were going to get such a policy. Therefore, of course, I was delighted when the Government took the steps which they did in September, and my only regret was that they had not felt able to do so some months earlier.
Imagine my disappointment and disillusionment, therefore, when I learned that there was some doubt as to the resolution with which these September measures were to be carried through, at any rate in the minds of the retiring Finance Ministers. Each of them in his speech to his constituents made plain the doubts which he felt, and I do not need to quote from the speeches they made, because they are in the minds of hon. Members.
It is quite true that we have had assurances from the Government that there is to be no change of policy, but I am bound to ask myself what these assurances are worth. Are they more than statements that the Government mean well? Just how resolute are the Government prepared to be? How far are they prepared to go? What price are they prepared to pay to conquer inflation? We do not know the answers to these questions, but we do know the answer to one question about the price which the Government are not prepared to pay, and it is that for which the former Chancellor was, in my opinion, so rightly asking.
The new Chancellor today had some very sombre words of warning to give to the House about the terms of trade. I think he was right. Personally, I do not find the external signs too reassuring. There is the threat of an American slump, and one could argue that it has already started. There is the world fall in commodity prices. Each of these can cause a serious threat to Great Britain's export trade, and I personally hold the view that the action which the late Chancellor sought to take was the least which this situation required.
Of course, it is difficult for people who sit on the back benches like myself to make up their minds about a controversy such as this. We have not heard the full argument as it was deployed in the


Cabinet. We do not even know to what extent we have been told the full story. In these circumstances it is a temptation to count the heads. Other Members of the Cabinet have pointed out that the Chancellor was alone and all the rest of the Cabinet were against him, as if that makes it any more likely that the Cabinet is right and the ex-Chancellor and the other Finance Ministers wrong. I am afraid that I have no very high opinion about the infallability of Cabinets. I remember that before the war we had just the same disagreements in the Chamberlain Cabinet, whether they were upon questions of principle or upon the pace at which we should proceed—and we had just the same sort of resignations.
The members of that Cabinet were every bit as honourable and able as those who hold office in the present one, and yet they could not have been more wrong. In all fairness, one can say the same thing of the Attlee Cabinet, which could have been more of a failure in dealing with the financial crises of its time.
What appealed to me most in the most striking speech of my right hon. Friend the Member for Monmouth was that he drew the attention of the present Chancellor to the great fund of good will which exists in the country, and which will respond to a lead. I have always taken the view that the Government would be astonished by the support they would find in the country if they led it courageously in a tough policy against inflation. I believe that the people of Britain instinctively know that there is something very much more important than the Welfare State or party Government, namely, Britain itself. Indeed, one can argue that there is something even more important even than Britain, that is, the collective conception of the sterling area, which may be placed in jeopardy by irresolution.
Tonight each of us must do his duty as he sees it. I have considered the arguments put forward with all the faculties that I possess, and in my very humble judgment there is little doubt that the retiring Finance Ministers were right and the Cabinet wrong. I have asked myself how I am to use my vote this evening, and I do not mind saying that I have had most profound difficulty

in making up my mind. We have had a most generous lead from the retiring Chancellor. We have a new Chancellor whom I do not wish to embarrass. I shall vote with the Government tonight, but I do not seek to conceal the fact that I shall do so with the greatest doubt and hesitation.

6.23 p.m.

Mr. Frederick Lee: This House is a very human institution. When I became a junior Minister I remember one of the elder statesmen saying to me, "If you do not like this House it will not like you," and I learnt that there was a lot of truth in that. On occasions such as this, when we are discussing resignations, the House is always at its best in its personal regard for those who have had to resign. My right hon. Friend the Leader of the Opposition made it abundantly clear that hon. Members on this side are violently opposed to the principles and policies laid down by the ex-Chancellor, yet we feel a very profound sadness that one whom we all like personally has had to hand in his seals of office.
It may well be that we shall be able to see once again the young Disraeli. I cast my mind back to the days when the right hon. Gentleman the Member for Monmouth (Mr. P. Thorneycroft) used to speak from a bench on this side of the House and gesticulate with his hands. He did not spare us in any way. His eyes used to flash all over the place. I have seen the veins in his neck stand out as he laid down the principles of modern Toryism. Now he is an older man, and he has had experience of high office, but I should like to feel that we shall again see him fighting for the principles in which he believes, rather than merely accepting the situation in a spirit, as it were, of "Well, this is inevitable", and retiring from the scene of Parliamentary cut and thrust.
Having said that about the retiring Chancellor and his colleagues, I must point out that, in reality, the people are not so much concerned with the Ministers who have resigned; they believe that the threat to their prosperity lies with those who have not resigned. It is with them that the House must now deal. No matter how we look at the question of resignations, it is important to consider what has been happening since 1951.
It is a fact that of the members of the Cabinet which first faced the House of Commons after the Tory victory at the General Election in 1951 only two remain, namely, the present Prime Minister and the Home Secretary. It would appear that even the present Prime Minister seems to think it more prudent to put about 11,000 miles between himself and the Home Secretary at this critical moment.

Mr. Osborne: No, that is unworthy.

Mr. Lee: I believe that the acting permanent deputy Prime Minister unpaid becomes every day more like the boy who
stood on the burning deck
Whence all but he had fled.
It seems that we have reached a sorry position when, looking at the Government Motion, we see that it is quite clear that they are even afraid to ask their supporters for a solid vote of confidence. That is the only interpretation which can be placed upon the Motion. The former Chancellor, in kinder works than I have used, expressed the same point of view. That kind of manœuvre, resorted to by a Government as being the only way in which they can get their supporters into the Lobby on their behalf, is a far greater measure of the real position of that Government than anything which can possibly be said by an hon. Member on this side of the House.
I should have thought that the Motion was utterly meaningless in any context other than that in which I have placed it. The fact is that the vast majority of the nation has no confidence in the Government; many hon. Members opposite have no confidence in the Government and, worst of all, they have no confidence left in themselves.

Hon. Members: How do you know?

Mr. John Hynd: Go and listen in the Lobbies now.

Mr. Lee: It is a situation unparalleled in Parliamentary life.

Mr. Osborne: What about 1951?

Mr. Lee: In these conditions democracy ceases to have any real meaning, and I join with my right hon. Friend in telling the Government that the greatest service they can possibly do to the country is to go at once.
It would be completely misleading to give the impression that the individual members of the Government—past or present—have brought us to this pass because of inefficiency in themselves. I do not charge them with that. It is Tory philosophy and all it stands for that has failed, and not merely individuals within a Government.
When the hon. Member for Solihull (Mr. M. Lindsay) spoke he was apprehensive that the Government would change their policy. What a remarkable situation. On all sides, even including the new Chancellor and the ex-Chancellor, hon. Members have agreed that the country is in a rather desperate economic plight, yet the hon. Member for Solihull is fearful only that the Government may change the policies that have brought us to that position. The Tory Party is at the moment a many-sided structure, but no matter at which side we look we do not see any policy which measures up to the economic situation that faces us. For that basic reason the Government should go. If there were an alternative policy to that which has so dismally failed there would be hope. The new Chancellor has pledged himself to carry on where his predecessor left off.
The stark fact is that Tory freedom does not work. That is the point upon which the nation must now make its determination known. While everyone knows that vastly increased industrial production is the only remedy for our ills, the Government have a vested interest in keeping production down. The ex-Chancellor of the Exchequer used to complain that we were trying to do too much; indeed, he said it again this afternoon. He has never, nor has the present Chancellor nor any Government supporter, attempted to define what we are overdoing. The obvious step would be to analyse what we are doing to find out what we can do without, but no Minister has tried to make that analysis. Once we can define what we ought not to do, some physical control becomes necessary. Rather than face a controlled and planned economy the Government prefer to see the economy of Britain get into a hopeless position.
The former Chancellor of the Exchequer, in his speech in July, rejected every device known to economics for concentrating our efforts upon essential production and cutting down on less important


things. He rejected import restrictions, price control, building control, and what he described as the "little budget" technique which includes further cuts in consumption. He also rejected tranquilliser pills, but never tried to give us a constructive plan for eliminating what he felt was not necessary.
On 25th July, in the course of what, in the light of what has happened since, was a remarkable speech, the ex-Chancellor said:
We are entering a period in which we are examining next year's expenditure.
It all sounds very familiar now. He went on:
I hope I judge the temper of the House rightly that it would wish to have the most stringent scrutiny of this. I am sure that I can count on those interested in limiting inflation to give us their full support in holding back Government expenditure, however unpopular that process may prove to be."—[OFFICIAL REPORT, 25th July, 1957; Vol. 574, c. 645.]
I thought at that time that the right hon. Gentleman was addressing the House of Commons. I now realise that he was addressing his own Front Bench when he said that he hoped he could count on their support. He now knows that in the crisis they ran away. When it came to the point, they failed and left him flat. That is the background to the present situation.
We always get back, in Tory philosophy, to the idea that if cuts are to be made they must be in health, education and the levels of employment. In that speech on 25th July we saw the first signs of what has led to the right hon. Gentleman's resignation. A little later in the speech he said:
I would just say to those who urge these actions that they must have the courage of their convictions. When we see, as we may see in certain areas and as a result of these reductions and restrictions already in operation, some increase in the number of unemployed or some decrease in the number of unfilled vacancies, we must recognise that it is the corollary of reducing the pressure of demand."—[OFFICIAL REPORT, 25th July, 1957; Vol. 574, s. 647.]
On whatever else we may differ there is no doubt what those words meant: the deliberate ending of full employment.
For a long time I have been asking the House for industrial planning which would enable the civil production programme to be stepped up as the conventional armaments programme went down,

but what do we see? Precisely the opposite policy. At the very moment when the Government's failure to plan in that way has brought unemployment and the armaments industries are cut back, the Government's aim is to restrict civil production.
I turn to the Minister of Labour; his trials may well be in front of him. On 30th October, when he did me the honour to reply to a speech I had made, he said:
All Chancellors since the war without exception, have had, in one form or another, policies of wage restraint, and all Ministers of Labour have been, as Members of the Cabinet, privy to them and presumably in agreement with them, just as I am now in the closest agreement with the Chancellor as regards both the diagnosis and prescription in our present economic difficulties."—[OFFICIAL REPORT, 30th October, 1957; Vol. 575, c. 233.]
I wonder whether the Minister of Labour would now come to the Dispatch Box and repeat those words. Something drastic has happened since 30th October to make the right hon. Gentleman decide that he can go no further with his right hon. Friend the ex-Chancellor.
Let us look at the results of those policies, even today. Yesterday, I had a Question on the Order Paper for oral answer—it was not reached—in which I asked the Minister of Labour to give figures of unemployed at the latest convenient date, and the comparable figures for 1956 and 1957. In reply, the right hon. Gentleman told me that at 9th December, 1957, in the employment exchanges of Great Brtain—which, I take it, does not include Northern Ireland where 8 per cent. of unemployment exists—there were 335,469 persons registered as unemployed, compared with 296,000 a year ago and 215,000 two years ago. In other words, because of the policy outlined from Government benches there were, on the 9th or 10th of December, 1957, 120,000 more unemployed than two years ago.
Perhaps even more graphic than that, when one looks at the figure of unemployed at the end of October, 1957, and compare it with the figure at 9th December—a period of about five or six weeks—there are over 60,000 more people unemployed. It may have been this fact that made the Minister of Labour decide that he could not go any further with the Chancellor. I hope that some of the things that we on this side of the House


have said have helped to bring him back from the edge of the abyss.
The position in the U.S.A. has been mentioned, where there are now 31 million people unemployed. The Economist forecast that between 4 and 5 million people will be unemployed in the United States in the next four months. As things are now, it is inevitable that we shall get the backwash of that kind of economic slump unless we can have a better planned economy than we have had from the Government up to now. That is the condemnation of the Government, that they have persevered, if that be the right word, with policies which clearly failed long ago. Their solution for their ills has been to exaggerate the causes of the ills, to continue with a stagnant production policy, and to refuse to try to agree on production priorities, and, when those things have failed, to try to cut down on the social services or the level of employment.
We must decide what are the things upon which we must concentrate our efforts and to which we must devote our scientific and financial resources. We must calmly and deliberately plan the policy of all Britain's industries and determine the priorities and essentials to maintain a decent living standard. If hon. Members opposite do not accept that, I challenge them to give any other way in which we can get out of our present position. It will require a selective, planned capital development programme instead of a blind credit squeeze. Because of their political dogma they will not face that position. It means the constructive development and expansion of certain industries in contradistinction to policies for less important industries. Of course, the power lobbies behind the Tory Party will not stand for that.
It is for these reasons that I feel that the presence of this Government in this day and age is something which of itself necessarily imposes a blight upon the British people. There is no remedy. The people of Britain must be given the opportunity to determine now whether they are willing to adhere to this sort of blind squeeze which pulls down the types of priority production that we need so much. They must be given the chance to decide whether we are to continue with a policy of permitting import

luxuries in greater volume than the essentials needed to preserve full employment.
I was glad to hear what the Chancellor said about the trade unions. I have never concealed my feelings in that respect. A Government cannot get the best out of their industrial set-up if they deliberately, openly, and wantonly antagonise the British trade union movement. That movement has never at any time wanted to adopt a sort of dog in the manger policy merely because of the presence of a Tory Government. In the first four oar five years of Tory government they did everything in their power to continue a constructive association with the Government to try to expand our economy and to get the best possible results for the people. They were deliberately and maliciously turned down time after time by Tory Chancellors. Policies were proceeded with which were bound to antagonise the working-class movement. I am not rejoicing in this, but deploring it.
I ask the present Chancellor to try to understand this view, because every thing now depends upon his ability to turn over to a new page. I ask him to look again at his policy and to get round the table with the members of the T.U.C. General Council. He will find them men who are desirous of having a proper constructive joint approach with the Government to our economic problems. But how can such men be expected to give unrestricted service to a Government whose policies constantly prejudice the position of those who work for wages and salaries? It is now utterly vital that this class war which Government policy has forced upon Britain should end. There is no hope for Britain unless it does end. I invite the new Chancellor to start his dispensation by obtaining a proper and constructive approach to the problems which he will face and to co-operate with members of the British trade union movement.
We are going into a phase that we have discussed many times and which men broadly call automation. There are now great fears in the minds of millions of people. Automation of itself requires a continuously expanding economy. If there is not an expanding economy, inevitably there will be unemployment


because of automation. With an expanding economy we can contain automation, increase our standards and production without causing unemployment. We are now going into that phase, and there is, therefore, a psychological war to be fought. There is the necessity to ease men's minds, to show them that we can go into this phase without massive unemployment. I challenge the Chancellor or any other hon. Member opposite to show me how we can manage to keep full employment with automation in a restrictive economy, or one which is not expanding in any way. It is a physical impossibility.
Therefore, in an age in which one recalls the "1984" of George Orwell, perhaps the slogan or thought upon which the next Labour Government can triumph is "Automation without Orwell." I am convinced that only by bringing that type of dispensation into the councils of the nation can we again have a united nation striving to get itself out of its economic problems, led by an understanding and sympathetic Government. I am sure that only by that method can Britain survive as a great nation. This Government has no chance at all whilst it continues with its present laissez faire policies of bringing about that reorganisation. It is almost a waste of time to appeal to the Government to try to do these things. The greatest service it can now do to Britain is to get out while the going is good.

6.49 p.m.

Mr. Beresford Craddock: During the past eight years while I have had the privilege of being a Member of the House I have listened to many speeches delivered by the hon. Member for Newton (Mr. Lee), and, although I have always disagreed with the views which he expressed, I have always regarded him as fair-minded. I am bound to say, however, that his reference to the Prime Minister's visit to the Commonwealth was rather mean. I thought that the Labour Party which, since 1945, has claimed to have discovered the Commonwealth and which has been such a great advocate of it, would have rejoiced in the fact that, despite the difficulties with which he had to contend at home, the Prime Minister went on his visit as planned. I think he did the right thing.
We have also heard from the hon. Member for Newton, as we heard from the Leader of the Opposition and from the hon. Member for Sheffield, Park (Mr. Mulley), that the only thing to do in the present situation is to get back to a controlled and planned economy. I am bound to say that I should have more faith in such a system if I could say that from 1945 to 1951, when we had what I understood to be a Socialist planned economy, it worked well. [HON. MEMBERS: "It did."] If a system which produced a series of crises in 1947, 1949 and 1951 and eventually led to devaluation of the £ is called a success, then for me words have lost their meaning.
We heard from the hon. Member for Newton the same old statement which we have heard a great deal this afternoon, namely, that Tory policy is leading to unemployment. The Labour Party is the last party ever to talk about unemployment. [HON. MEMBERS: "Why?"] I will explain why. I am old enough to remember the position in 1929 when the Socialist Party came into power. [Laughter.] Hon. Members opposite may laugh; they do not like to be reminded of these things. In 1929 unemployment in the country stood at 750,000, but eighteen months later it was nearly 31, million.

Mr. Roy Jenkins: The hon. Member should get his figures right.

Mr. Craddock: I am as good at figures as is the hon. Member for Stechford (Mr. Roy Jenkins), and I have had much more practical experience in dealing with figures than he.

Mr. Jack Jones: The hon. Member usually gets his facts right. If there were a General Election next week and the Labour Party were returned to power, as it would be, we should then find ourselves in the same position as in the period about which the hon. Member spoke. We should be in the middle of the downward slide which had arisen from policies that had been wrongly pursued.

Mr. Craddock: Let me turn back to the accusation that Tory policy is leading to unemployment. I say categorically that those in the Labour Party are the last people to make that accusation, because unemployment was 750,000 in 1929 and eighteen months later it was over 3 million. I have never taken the view


that the Socialist Party were entirely responsible for that state of affairs; it would not be fair to say that they were. They were faced with an international situation and with economic nationalism throughout the world with which no single Government could cope. All I am asking is that hon. Members opposite should be as fair in their approach to these problems as we on this side of the House try to be.
When I read in the Press about the demand by the Opposition for a debate on the economic situation, I wondered whether such a debate would be worth while. After all, we have had several debates on the economic situation in the last few months. In a few weeks we shall be considering the Estimates, and in the early spring we shall have the Budget. I wondered whether it was not a waste of Parliamentary time to have another debate on the economic state of the nation at this juncture.

Mr. Jack Jones: The Chancellor of the Exchequer had resigned.

Mr. Craddock: That may well be.

Mr. Lee: A little local problem.

Mr. Craddock: Frankly, that was my opinion, but I was wrong in my view because I think the debate so far has been very much worth while, for two reasons particularly. In giving the first, I will repeat what has been said from both sides of the House; we have had the privilege of listening to a very great speech by my right hon. Friend the Member for Mon-month (Mr. P. Thorneycroft). My second reason for saying that I consider the debate worth while is that we have heard in straightforward, categorical terms from the Leader of the Opposition and from other hon. Members that if the Labour Party is returned to power we are to have a controlled and planned economy. With the best will in the world, I cannot see how, under such a system, we can avoid the rationing of all sorts of commodities, including food. If we have a planned economy, I do not see how we can possibly avoid that.
Although, as I have said, I pay my humble and sincere tribute to my right hon. Friend the Member for Monmouth for his very fine speech, I am bound to say that while I admire the stand which he took when he felt so strongly that a matter of principle was involved. I do

not feel that I can go as far as that with him. In my view, there was no question of principle involved. Apart from right hon. Gentlemen who sit in the Cabinet and know the facts, we are all working in the dark, because as back benchers we do not know the facts. Nevertheless, I should have thought that this was more a question of judgment than of principle, and I very much regret that my right hon. Friend felt compelled to resign on, as far as I can understand it, a question of the size of the Budget.
When considering these matters, we have to try to get the whole picture in proper perspective. In his opening speech, my right hon. Friend the Chancellor said that at the present level of expenditure of some £5,000 million the Budget amounts to about 27 per cent. of the national income.

Mr. Holt: In my speech, I had to correct that figure. I think the hon. Member was in the House at the time. In referring to a percentage of 27 per cent., the Chancellor was referring to what was above the line. I suggested to him that he had given a wrong impression by giving those figures.

Mr. Craddock: If we take the total expenditure as roughly £5,000 million, it represents 27 per cent. to 28 per cent. of the national income.
In the last Budget before the Second World War, the corresponding figure was 21 per cent. to 22 per cent. I am not saying that the figure of 27 per cent. to 28 per cent. is not very substantial, and all efforts by all Chancellors should be to try to reduce it. In my view, however, we cannot say that if we maintain the Budget figure at about its present level it would have a great effect on the strength or stability of sterling in the international market. I am supported in that view by the fact that although we have had all this talk during the last few weeks of Budget expenditure being increased, the quotation for sterling, apart from a small temporary decrease, has risen and it is standing at a very high figure today. If the world is convinced that our finances are being carried on in a prudent and careful way, I do not think that the question of a few million pounds above or below a fixed figure has any appreciable effect on the strength of sterling.
We come back to the real question which has occupied the minds of many of us for many a year, and which again became very acute in September last. For myself, I am quite satisfied that the real cause of the flight from sterling last September was that foreigners had lost confidence in this country for one reason only. As my right hon. Friend very forcibly pointed out when he was Chancellor, that reason was a cost inflation, and the cause of that situation today is that wages have been going up far too high, without a corresponding increase in productivity for those increases.
If I may respectfully say so, I wholeheartedly agree with my right hon. Friends the Member for Monmouth and the Chancellor of the Exchequer that, at this juncture in our economic history, it is quite impossible to contemplate any increases in wages at all unless they are tied to increased productivity—

Mr. Lee: But the Government are doing everything they can to depress production, and, as the hon. Gentleman is now saying that increased wages must depend on people being able to increase production, how does he marry the two things?

Mr. Craddock: I do not, of course, agree with the hon. Gentleman when he says that the Government are doing everything they can to depress production. I do not understand what that means at all. We have been accused of cutting down capital expenditure, and so on, but we must not forget that, despite all our difficulties, capital expenditure is running at a very high rate in both the nationalised and the private sector of industry. I therefore repeat my view that the only justification for increases in remuneration is increased productivity. I believe that to be the whole crux of the situation.
How are we to tie up those two things? In November of last year a letter of mine was published in The Times, in which I suggested that we have two indices of production. We have an index for a particular industry, and a general index of the increase in productivity throughout the country as a whole. I thought that it would not be difficult to relate an increased productivity to an increase in

wages in a particular industry. I suggested that we should use the general index for an increase in the remuneration of those people who, for want of a better expression, are called non-productive people in industry. Frankly, I do not accept the word "non-productive," because I believe that everyone, whether he be accountant or railwayman or what, who is working in an industry is playing an essential part in it.
I mention that letter to The Times because I had quite a large number of replies from people in business and commerce all over the country, and I was very pleased that quite a large number of those experienced people were rather taken with my idea. But the main criticism was that the present index of productivity was not a reliable one, and that it took too long to work out.
I believe that the time has come when management, and labour through the trade unions, and the Government must get together to try to evolve a method whereby people in all sections of industry will get an automatic increase in remuneration as a result, and only as a result, of increased productivity. Lord Chandos's idea was a 2½ per cent. automatic increase, but I would like us to try to link the increase with productivity, and then every person in industry would, as productivity increased, be entitled, by agreement, to an automatic increase in remuneration.
Surely that is not beyond the bounds of possibility? With all our experience and with all the devices that we have for speeding up things it should surely not be impossible for the two sides of industry and the Government to start some system like that. I should think that it would be far better than the awful scramble which, as Lord Chandos said and as we all know, is a quite unworthy state of affairs in a great industrial nation.
I have given two reasons why I think that this debate, contrary to my expectations, is worth while. I suggest that if we can all get down to some means of linking remuneration to productivity this debate will certainly not have been without good results. And, finally, I wish my right hon. Friend the Chancellor the very best of good wishes in what we all realise will be a very difficult task indeed.

7.7 p.m.

Mr. Roy Jenkins: We have all listened with interest to the speech just made by the hon. Member for Spelthorne (Mr. Beresford Craddock). We were particularly glad that, although he first said that he had not thought that the debate would be worth while, he decided before the end of the speech that it was. One of his more interesting statements was, I thought, that the pressure against sterling during the late summer and early autumn was to be accounted for almost exclusively by a cost inflation in this country.
In view of the facts, that seems to be an extraordinary position to take up. After all, there were movements in favour of or against other currencies. There was a particularly strong movement in favour of the mark yet, during the summer, to a greater extent than at any other time for a great number of years, German costs were moving up relative to ours very rapidly indeed. That was an entirely new position. If we are to try to decide the causes of a particular movement it is the relative change that is important, and if one compares British and German wage movements over the last few years one sees very little difference between the two, but a very great difference in increased productivity.
As I say, one sees a very similar movement in wages but with increased productivity in Germany, while here, largely as a result of Government policy, there has been practically no increase in productivity at all. Therefore it would, in the first place, be very mistaken to start with the assumption that the only, or even the main, cause of our difficulty was cost inflation; and I believe that even if it were the main cause it should not be discussed in terms of wage rates unassociated with production.
Earlier this afternoon we listened to a most impressive speech from the right hon. Gentleman the Member for Monmouth (Mr. P. Thorneycroft). It was a speech of great force and considerable restraint—and, perhaps, of considerable generosity towards some of his ex-colleagues—but I certainly endorse every word that my hon. Friend the Member for Sheffield, Park (Mr. Mulley) said about our attitude to this and previous speeches of the right hon. Gentleman.
However, I am sure that the right hon. Gentleman would not wish it to be

thought that, because he has retired from his previous position, he is in any way insulated from controversy. It would be very sad from the point of view of his political future if the outlook were as dim as that. I am bound to say that, although it was a very powerful speech and although it gained a great deal in form from the absence of the Departmental brief, I thought it had lost something in substance, because his analysis was, for the most part, extremely unclear, and where it was clear it was mistaken.
I understood the right hon. Gentleman to say that the root of our problem was that we were doing, and had been attempting for a long time to do, a great deal too much. I am not quite sure what he means by that, and I think that there can be two possible interpretations. It could be said that we were trying to do too many things in the sense of trying to do incompatibles, trying to adopt the posture conjured up by the catchphrase "Trying to ride two horses at once". If that was his meaning, I would, to some extent, agree with him upon it. I think that we are trying to do too much when we try both to run our own economy at home, as we ought, at a high level of activity, and at the same time try to keep sterling as a world currency, carrying the dollar needs of most of the rest of the world upon our own backs. To that extent, I think, we are trying to do incompatible things.
If the right hon. Gentleman means that we are trying to do too much in the sense that we have been consistently overstraining our economy, and still continue to do so, then I do not follow him at all. My right hon. Friend the Member for Leeds, South (Mr. Gaitskell) produced a number of figures to suggest that, so far from our economy being overstrained at the present time, it is being under-used. Whatever else may be said, there has surely been less strain on the economy, in the sense of capacity being fully used, in the past two years than in most years before then since the war. Since the earlier credit squeeze came into operation and since production ceased to go up, the strain has been less.
Have the advantages, which the right hon. Member for Monmouth thought would automatically flow from a substantial further reduction in strain, begun to show themselves as a result of what has happened in the last two years? Since


the economy has been subject to rather less strain than previously, we have had not one foreign exchange crisis every two years but one every year. During the last three years, we have had a foreign exchange crisis every year. This is a new development.

Mr. Lee: We only have one now, and that is permanent.

Mr. Jenkins: Taking the worst view of the Labour Government, that Government never produced a foreign exchange crisis more than once every two years. The years 1955, 1956 and 1957 have doubled the rate of crisis.

Mr. Osborne: The hon. Gentleman and his friends produced a devaluation, which we have not.

Mr. Jenkins: I am glad that the hon. Member for Louth (Mr. Osborne) has put that point, because it is a point often put from the benches opposite as though it were a final, definitive answer in any argument about the economic policy of the Labour Government. Nobody, before devaluation, ever wants to devalue, and the Labour Government in 1949 certainly did not. Equally, I do not believe that anyone looking at the situation in the post-war world could argue that, from a long-term point of view, a rate of four dollars to the £ was a tenable one. I do not, therefore, for a single moment believe that the fact that devaluation took place at that time is something necessarily to be taken as an argument against the economic policy of the Labour Government. Does the hon. Member for Louth believe that a fate of four dollars to the £, in view of what happened before and since, really met the realities of the post-war world situation?

Mr. Osborne: Yes. If the hon. Gentleman will bear in mind the economic aid we had under the Marshall Plan and the loans we had from America and from Canada, he will realise that 4·03 dollars to the £ was a really tenable rate of exchange.

Mr. Jenkins: I was trying to deal with one of the stock arguments produced from the other side, and all that happened was that two others were produced. I do not want to go over all that ground again.
Not only during these two years have we had a double rate of foreign exchange crisis, but we have had, even taking into account the enormous benefit we got from the change in the terms of trade, no real approach to price stability at home. The home price situation has not become any easier. There is some flattening out because, as the Chancellor told us this afternoon, we have had an enormous bonus during the past year as a result of the change in the terms of trade.
I now turn from the ex-Chancellor to the future Chancellor, because, as the right hon. Member for Monmouth himself said, it is the future which is even more important than the past.

Mr. J. Grimond: The hon. Gentleman is speeding up Chancellors.

Mr. Jenkins: The rate of turnover is very fast, and it is difficult to keep one's tenses exactly right. It is the ex-Minister of Agriculture, Fisheries and Food to whom I wish to apply my remarks at this stage.
The new Chancellor, in his speech this afternoon, said that, coming to the Treasury, he found it in some ways a perplexing situation and he wished to take a new look at our problems. I should like to suggest to him two aspects of our present problems which it would be very desirable for him to consder with a fresh and unprejudiced eye. They are, in a sense, two paradoxes in our present situation, and I should like the right hon. Gentleman to look very carefully at them and consider what the explanation for their existence might be.
First, we have at present a very strong balance of payments position, largely to be accounted for by the decline in our import prices, but, nonetheless, a very strong position; at the present time, I suppose that the surplus is running at an annual rate of somewhere between £300 million and £400 million. It is an extremely strong position. Why is it, in these circumstances, that we had, such a short time ago, a very serious foreign exchange crisis? Why is it that gold is even now coming in at such a slow rate? Why is it that anyone who looks at all seriously at our situation must be very worried about the prospects of sterling next summer and autumn, when we have


at the moment this extremely strong balance of payments position?
I suggest that the trouble we had last autumn and the trouble we may have to face again is associated with a good deal more than our own internal troubles, whether cost inflation or whatever elese they may be. Our difficulty is that we find ourselves with a strong internal balance of payments position but with a very weak currency from the standpoint of foreign exchange, in a world which, it is becoming increasingly clear, is slipping dangerously near deflation and a slump situation. There is room for argument about what is happening in this country. There is no argument about what has been happening and is still happening to world commodity prices. There is not room for argument about the fact that what is happening in America must, at least, cause considerable doubt and concern.
In these circumstances, we, as an important country in the world from an economic point of view, with a strong balance of payments position, ought to be urging the rest of the world to re-inflate. We ought to be urging the United States to set her economy going up again as quickly as possible. We ought to be playing our part in stopping this extremely dangerous slide in world commodity prices. But we cannot do that because, despite our strong balance of payments position, we have created a situation—largely, I think, by pursuing the myth of sterling being a world currency at all costs—in which our currency is still in extreme danger. At a time when there are these strong deflationary factors at work in the world, the former Chancellor of the Exchequer—the rest of the Tory Party, to some extent, supporting him—nailed his standard to the mast of trying to stop the decline in the value of the £ at all costs and above everything else; and this afternoon, he reaffirmed his view and left his standard even more firmly attached.

Sir Keith Joseph: I am extremely interested in the hon. Member's argument and sympathetic to the objective of expansion, but does he think that, in the words of The Times this morning, we can with our very small reserves buy the world out of her tendency towards deflation?

Mr. Jenkins: I certainly do not think we can do it alone. I am saying that the extreme disadvantage of our present position is that we are far more vulnerable than we ought to be with a balance of payments surplus running at an annual rate of over £300 million. That, I think, is largely because we are trying to make sterling do too much in the world. Our danger is not that we are trying to do too much as home—we are not. In many ways, we are trying to do too little at home. The excess capacity in the United States steel industry is being reflected in the excess capacity in the British steel industry, as my hon. Friend the Member for Rotherham (MT. Jack Jones) told me just now; and we all know from other evidence that we are not trying to do enough at home. We are, however, trying to make out currency do too much abroad. That is the first paradox to which, I hope, the right hon. Gentleman will apply himself.
The second paradox is that we have at the present time enormously favourable terms of trade. We have all appreciated that they were very favourable and have been for some time. I doubt whether many of us—I certainly have not myself—appreciated until recently quite how favourable the terms of trade have been during 1957. They were so favourable that we gained as much on this account during the year as we would have done in national wealth had the index of industrial production increased between 6 and 7 per cent. That is a quite big increase.
In other words, although it has not been a particularly brilliant year from the viewpoint of economic policy, 1957 has been a year in which the Government received from overseas, as a once-for-all gift—it is certainly not likely to continue—an amount equivalent to an increase in industrial production of between 6 and 7 per cent. There seems to be nothing at all for the Government to congratulate themselves upon in the fact that, as the Chancellor said this afternoon, we are, perhaps, moving towards more stable prices.
I am rather surprised that we have not already got stable prices, if not slightly falling prices. After all, import prices have fallen by 10 per cent. during the past year. Even with import prices falling by 10 per cent.—in other words, in the most favourable possible circumstances,


with a credit squeeze, which was fairly stiff, even up to September, or stiff enough, at least, to take all the buoyancy out of industrial production, and still stiffer since September—the Government have not been able to produce stable prices. I should have thought that this suggested very strongly that the whole method by which they have attempted to do so mistaken. If they cannot do it in these circumstances, the chances of doing it are very slim indeed.

Mr. Beresford Craddock: Is there not another factor in this situation: namely, the increase in the price of coal, which is an important factor in the whole of our economy, as the hon. Member well knows?

Mr. Jenkins: All sorts of prices are important factors in our economy and if they go up, the price level will not remain stable. This, however, is a slightly circular argument. If we are discussing why the Government have not succeeded in keeping prices stable, it does not seem relevant to get up and say, "But the price of something has gone up." Of course it has gone up. That is the starting point, or we would not have the argument at all.
I pass from the second of the two paradoxes to the second main point in what I want to say to the Chancellor. When will we get back to an expansionist policy? This is a question which I tried to put to the right hon. Gentleman when he was good enough to give way towards the close of his speech this afternoon. In answer to it, he admitted more explicitly than I have heard it admitted before that higher production was now very low in the queue of the Government's economic priorities.
In a sense, that admission was intellectually refreshing. It is an improvement from the position which we have had so often, which we had to some extent from the hon. Member for Spelthorne a few moments ago and which we have had from Government spokesmen in the past. It is a refreshing change from the attitude of saying that wages must be geared to productivity and that we want productivity to rise, while at the same time pursuing, without admitting it, a general economic policy which makes it almost impossible for productivity to do anything of the sort. To that extent, therefore, the new Chancellor's attitude was a great improvement.
The idea that we must go on indefinitely forgoing increases in production does, however, produce an extremely dismal outlook. I can envisage—I certainly accept—the point of view that an economy cannot always be run absolutely flat out without ever having a pause for breath. But we have been having a pause for breath since 1955 and all that has happened, after two years of pausing for breath, is that we are told we must have a bigger pause for more breath and must slow down production still further.
The difficulty of the situation is that we are now nearly at the end of the third year in which the production index has been virtually flat. As my hon. Friend the Member for the Park division of Sheffield pointed out, the sums of money involved are very substantial. As a nation, we would be between £1,000 and £1,500 million a year better off if the index of industrial production had continued to rise as it ought to have done. This is a very large amount. It makes the £50 million of the right hon. Member for Monmouth—we do not quite know whether we should take it as £50 million or something slightly different—and it makes marginal budgetary amounts appear of comparative unimportance. When we are dealing with a policy which, rightly or wrongly, has cost us well over £1,000 million a year already, it is not a matter of primary importance whether the Budget is to be increased or decreased by £50 million.
Hon. Members opposite have for some time been very fond of accusing us on this side of quarrelling and disputing in a rather dreary, unimaginative way about the exact division of the national cake without being concerned about the much more important problem of increasing the the size of the national cake. Whether that was ever true—I doubt whether it was—it seems to me that it is now the reverse of the truth and that the position has completely changed round. The Government have at least appeared to be indifferent to the size of the national cake for three years and are still, after three years, putting it at the bottom of their queue, while getting themselves, to say the least, into great inter-party difficulties about a very small distribution of that cake between different users.
I ask the Chancellor, therefore, whether or not he is in a position to


hold out some hope that we can get back quite quickly to a policy of expanding demand in some form or other and, consequently, expanding production, because production will not expand unless there is at present some expansion of demand.
We have all, on both sides, to some extent been trying to decide what we think Cabinet disputes and divisions have been about. Sometimes it is suggested that they were deeper and wider, and sometimes narrower, than we thought. I suspect, however, that we all think that they were about something rather more than £50 million. I suspect that they certainly had something to do with the real division of opinion about whether we should get back as quickly as possible to an expansionist policy at the present time.
I see that the Lord Privy Seal has just returned to the Chamber. This is exactly the point at which I wish to refer to him. His return at this stage was extremely fortunate, but not prearranged. The Lord Privy Seal the other day in the country made a moving and typical speech in which he spoke about the causes to which some of us, as he said, had devoted our lives, and we all know that those causes to which the Lord Privy Seal has devoted his life are manifest. We remember—I do, very well—an article that he wrote, in the Evening Standard, I think it was, very soon after the present extreme restrictionist policy was adopted, in which he gave as clear notice as could possibly be given by any Minister in the Cabinet and writing in public about the policy of another Minister, that he, at any rate, wanted to get back to an expansionist policy at the earliest possible time. He referred to the great days of 1953 and 1954 when our national income and national wealth were going up so much more quickly.
There is no doubt that there was some such dispute as that in the Cabinet, and it is right and desirable that there should be some such dispute. I hope very much that the resignation of the late Chancellor, a resignation which I regret on personal grounds, means much more than a change of personalities in the Chancellorship and means a change of policy, because there must be a reversal of policy. There must be a period of expanding

production and investment in this country, and we must be prepared to adopt such a policy and to adopt general controls over foreign trade, and to retreat from this hopelessly exposed position associated with maintaining sterling as a world currency at all costs.
Let us remember also the price we have already paid for not doing that, a price of between £1,000 million and £1,500 million a year. I hope we shall not go on much longer with this present policy which is not making the £ stable, not making prices stable, but which is costing us a great deal, including damage to our national wealth and to our influence in world economic affairs.

7.32 p.m.

Sir Toby Low: I have often listened to the hon. Member for Stechford (Mr. Roy Jenkins) giving us the benefit of his great knowledge and study of economic matters, and there have been occasions when I have taken part in debates which have been started by my right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft) and closed by myself upon these matters; and I have always felt great humility after the hon. Gentleman has been talking, because he appears to know such a tremendous lot about them.
I understand, of course, the importance which the hon. Gentleman and his party attach to industrial production, but are they right to seek for industrial production without any qualification at all? Is there any great virtue in just producing anything at any cost? All of us look for expansion as soon as it is practicable. There is no difference between us about that, but, surely, what we want is to increase the production of the right things at lower cost. That is what the Government policy and the policy of my right hon. Friend was designed to lead to.
The hon. Gentleman put forward the most extraordinary confusion of thought. I am getting rather haughty, as he is about these things. He said that he really did not understand why prices had not been stable in the last year or so, because import prices had been dropping, certainly not rising. One of my hon. Friends reminded him of the price of coal. That is hardly affected by the cost of importing anything, is it? Has the hon. Gentleman not read, among the many books I know he does read, and the many pamphlets issued from the


Treasury, of the steady increase in labour costs per unit? Surely that is a problem we are all here to deal with.
Then the hon. Gentleman went on to suggest, and he closed on this, that one of the greatest vices of the present policy in the present situation was that sterling was a world currency. He appeared to us to suggest that we should bring that condition to an end. How we should bring it to an end I do not know. How that can be done when it is a world currency, and a world currency, presumably, because other nations like its being a world currency just as much as we ourselves do, I do not know. It would interest me to know, and I hope that the right hon. Gentleman who will wind up for the Opposition will tell us whether that is part of the Opposition's policy. That really would be calculated to strengthen sterling!
The hon. Gentleman said something else I must dispose of at once. He tried to imply that devaluation in 1949 was obviously essential after the war, that it was quite impossible to hold the rate at four dollars and a bit to the £. Will he please explain why the then Chancellor of the Exchequer, in 1947, who was a member of his party, thought it right to make the £ convertible at that rate? I really think that some of the observations the hon. Gentleman made today were rather extraordinary, coming from him. Indeed, I was rather disappointed in him, as, also, I was a little disappointed by the observations of the Leader of the Opposition, though not very surprised because we have heard that sort of speech before.
It is usual, when we hear the Leader of the Opposition or the right hon. Member for Huyton (Mr. H. Wilson), to be treated to ten minutes of wit at the expense of most of my right hon. Friends on the Treasury Bench; and then suddenly that stops and we get the same lecture and the same description of measures which ought to be taken today and which proved themselves wholly useless in the years from 1946 to 1951.
There was one very extraordinary thing about the speech of the Leader of the Opposition today. He seemed to overlook altogether the fact that sterling is a world trading currency and that we are the bankers for the sterling area. How

he can justify some of his observations against that background I really cannot imagine.

Mr. Roy Jenkins: Mr. Roy Jenkins rose—

Sir T. Low: Is the hon. Gentleman going to defend his right hon. Friend?

Mr. Jenkins: The right hon. Gentleman must not behave as though sterling is a world currency by an act of God and entirely independent of the policy of any Government, because to a very large extent the present extremely exposed position was created by the decision of the present Government to support by means of exchange equalisation the transferable rate which gives everybody in the world the right to convert into dollars at a rate very near to official parity. I cannot at this moment, in an intervention in someone else's speech, argue whether that is right or wrong, but the fact that it is so is part of a deliberate act of policy on the part of the Government.

Sir T. Low: The sterling area has existed for far longer than the present Government or their two predecessors and beyond the time when the party opposite was in office. What worries me about the argument is that it is an alibi.
The hon. Gentleman, in his speech, argued that the pressure on sterling in August was not brought about solely, or indeed initially, by anything we had done. That can be justified, but surely the thing which matters is that if it happened we were not in a position to withstand it without taking emergency action. It is that which we want to get out of. That is why I think it is very important that we should press forward with the policies which the present Chancellor of the Exchequer outlined to us today with, if I may say so, a measure of firmness and clarity which pleased all of his hon. Friends on this side of the House.
I was very glad to hear him say that nothing has happened since September and in the two months since the House approved the present policy to make it wise or necessary to change that policy. Everything that has happened has shown how right is that policy. [Laughter.] Yes. Particularly is that so with the exchange value of the £. I should like to add a small word of warning to those who look at the rate of the £ sterling


today and think that that, without any great effort of ourselves, will necessarily last. The testing time is nine months or so ahead. That we know, and I am sure that we should be wise not to relax our measures now because we think that the £ is standing high today.
If we look at the home front too, we may surely take some comfort in the success of the new policies announced in September. Ore of the greatest comforts to me is that men and women in the country are beginning to appreciate the object of that policy, which is to bring inflation to an end—not to restrain it, as some hon. and right hon. Members opposite have often advocated. For that purpose, quite a complicated pattern of policy—the Bank Rate, the credit squeeze, the holding down of investment, the holding down of expenditure and the restraint of increases in incomes—is necessary. All those are intricate parts of a pattern of policy which is beginning to prove so successful.
I would say to my right hon. Friends on the Front Bench that there are many of us who feel that that pattern of policy stands together. We do not want to remove any part of the pattern. The Bank Rate by itself is no use. Those measures that we introduced with the Bank Rate are not effective by themselves. It is the pattern altogether that matters. In previous discussions on this matter we have concentrated mostly on the wages and the incomes points. Today, the minds of most speakers have concentrated on the point of Government expenditure. These points are, of course, related, but I hope that on the wages point the House will have taken note of what my right hon. Friend the Chancellor of the Exchequer said when he reminded us that the stabilisation of incomes is just as important today as it was in September and the succeeding months. We can expect men in industry to postpone their demands for better incomes—unless these are justified by increased output—or to put off some plans for investing more, if the right monetary conditions are maintained and if the Government themselves practise what they preach. I understand that the Chancellor, and I am not criticising him in any way, is resolved—

Mr. Amory: I want to make it absolutely clear that the Government's policy in the wages field remains exactly as stated by my right hon. Friends on a number of occasions in the past few

months. Our own attitude will be exactly what we expect from others.

Sir T. Low: I was just about to add that it seems to me absolutely vital that for some months yet the Government must certainly resist giving out more money for higher incomes, however attractive the purposes may appear to be.

Mr. W. Griffiths: The right hon. Gentleman has been referring to the need to hold down Government expenditure, and we have been reading in the newspapers about the possibility of the need to raise more revenue, for example, to meet increased expenditure on the Health Service. If it were that that money had to be raised by increasing the National Insurance contribution quite steeply, which might be the Government's way of doing it, would the right hon. Gentleman not think that that would result quite justifiably in a new round of wage increases?

Sir T. Low: That is a double-barrelled question. First, would it be justified. I would doubt that very much. Secondly, would it give rise to an immediate claim for more wages? That would depend upon many other factors, such as monetary conditions and general production. But I was trying, in such logical order as I could, to cover these points and I was about to say a few words about Government expenditure.
I do not think that there is really any difference of opinion in the House that the level of Government expenditure must influence the amount of money available and the level of demand. We all know that the level of Government expenditure in money terms has been rising inexorably. We can take comfort from the fact that the proportion of gross national income covered by expenditure over the line has been falling, from 32 per cent. to 27 per cent., and that the total expenditure of the Government, as The Times said on 13th January, has, in terms of the proportion of gross national income, fallen in the last five years by about 3 per cent.
Many of us would like to see that proportion fall further. That is a very easy thing indeed to say. It is perhaps one of the luxuries that a back-bencher enjoys that he is able to say that without having to be responsible for achieving it. It is a luxury which is available to those


who write in newspapers. I was interested to note that The Times, which published some good leading articles recently on the importance of a strict control of Government expenditure, with much of which I completely agreed, the day after one of these articles appeared had two leading articles advocating increased expenditure, one on university grants and the other on mental health. I do not accuse The Times for that, nor would I accuse any hon. Member who felt like that, but that is the reality which my right hon. Friends on the Front Bench have to deal with, and, if those new ideas are to be fitted in, a way has to be made for them.
There are some who have mentioned social service expenditure and who have said that it is not sacrosanct. There are some who think that it ought to be sacrosanct. I do not believe that our nation, which spends as much as it does on food and drink, cannot afford the present level of social services. I am certain that it can, but that is quite a different thing from saying how they should be paid for.
It is one thing to say that we should have a given quality and quantity of social services and that it should be provided by public money in the first place. It is quite another thing to say that all that should be free. This is no new principle. Right hon. Gentlemen opposite had to consider the point in 1951 and had to come to the conclusion that charges must be placed upon things which were hitherto free.
Nor is it a new principle that there should be some contribution from each individual working man's pocket instead of this coming out of the general fund of taxation. By "working man" I mean men who are active and working in whatever walk of life. I am, therefore, glad to see from statements in the newspapers that the Government are considering all possible methods of financing the social services.

Mr. E. Shinwell: At this stage, may I interrupt the right hon. Gentleman by drawing his attention to the speech made by his right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft), in the course of which he referred to the very high expenditure incurred by the Ministry of Supply? In the speech he made to his constituents he mentioned

an expenditure of about £270 million annually. Is it not possible, through the abolition of the Ministry of Supply, or by some modification of its functions, to save a vast sum of money in that fashion? Would the right hon. Gentleman comment on that?

Sir T. Low: Why the right hon. Gentleman should single me out to answer that question in the course of a speech on general economic policy, I cannot understand. We have not yet seen the Estimates. I served in the Ministry of Supply and, not being as humble as I ought to be, I thought when I was there that we were doing all we could to save public money and get the most out of the Ministry of Supply. As to what is happening now, I will wait and see when the Estimates come before us, which is the proper time to discuss that point.

Mr. Shinwell: But the right hon. Gentleman said in the course of his speech—[Laughter.] This is an important matter. The right hon. Gentleman wants to save money, but he says that it is not easy to do so. I am directing his attention to one means of saving a great deal of Government expenditure. It is no use his riding off by saying that he wants to wait for the Estimates. That is an alibi. Let him tell us now whether he is in favour of abolishing the Ministry of Supply, which might save us £100 million annually.

Sir T. Low: I am not in favour of standing up in the House of Commons at ten minutes to eight on a Thursday evening and saying that I am in favour of the abolition of the Ministry of Supply.
All this fits in very well with the point I am about to make. Hon. and right hon. Members here must be aware that with the information available to them it is not only difficult but impossible for us to suggest the exact level at which Government expenditure should rightly be held. We must wait and see the Estimates. We can all agree that the aim should be to get it as near as, or even below, this year's expenditure. However, none of us here, without the figures, can really give an intelligent pronouncement upon the implications of that.

Mr. Shinwell: It is intention that matters.

Sir T. Low: I was just coining to my right hon. Friend's resignation, which I regret on personal grounds as well as on national grounds. If I may strike a personal note, I, of all hon. Members in this House, worked the longest with my right hon. Friend when he was in office. This is the way I see his position, and I am speaking for myself. As I understand, my right hon. Friend considered it essential that the Government should observe in their own expenditure at least the same standard of financial stringency as he had imposed upon others. In his view, as he has put it to us, if this were done the absolute maximum of Government planned expenditure next year should be no more than the total spent this year. That is intelligible, and anybody can see that this argument has validity.
One can say that different views can be taken about it and my hon. Friend the Member for Spelthorne (Mr. Beresford Craddock) has taken a different view. I think it was my right hon. Friend himself who said that there can be no absolute certainty about who is right, but of one thing I have no doubt. It is this, and it is important not only for my right hon. Friend, not only for the party, but also for the House of Commons. If a Chancellor does hold the views expressed by my right hon. Friend, he must be right to resign if Government expenditure is to exceed, by whatever margin, the maximum to which he considers himself committed. Indeed, to do otherwise would be not only to weaken his own position, but to weaken the office of Chancellor and the credit of the Government.
In saying that, I am not making the point that the Government were wrong. I know it is unpopular to sit upon a fence, or try to back both horses, but I think it is likely, as The Times has said on two occasions, that if my right hon. Friend was right to resign my right hon. Friends on the Front Bench were right not to accede to his requests. I think that that is possible. We do not know now, but on the simple point of whether my right hon. Friend was right to resign I say, undoubtedly yes.
I would add one more thing, namely, that resignations on such grounds do no one harm. They do us all good, especially in Parliament. There are those who

attack us here for being in general a body of pygmies, and I think that they should take note of the stature, integrity and courage of men who surrender high office to protect a principle to which they believe themselves committed. In saying this—in case I give any false impressions—I do not wish to detract from the tributes paid to my right hon. Friends on the Front Bench. I think that they are as much entitled to claim courage and integrity for themselves as is my right hon. Friend.
That is how I see it, and that is why what I have said now is not the slightest degree inconsistent with the full support that I have tried to give to my right hon. Friend's statement and to his policies. The views I have expressed are not, of course, the views of everyone. They may perhaps be said to be tainted by the fact that have worked so closely with my right hon. Friend, but they are views which are as sincerely held as those I hold about the Government's current policies and about the fitness of my right hon. Friend the Chancellor of the Exchequer to guide us through the difficulties ahead. I assure him that he has my support, as he has the support of all of us on this side of the House, and our best wishes in his resolve to preserve the value of sterling at home and overseas.

Mr. Deputy-Speaker (Sir Gordon Touche): Miss Herbison.

Mr. Awbery: Before the right hon. Gentleman sits down—

Mr. Deputy-Speaker: Order. I have called the next speaker.

7.58 p.m.

Miss Margaret Herbison: I make no apology at this stage for introducing into this general debate two specific examples of the result of the Government's policy. They are two examples which affect the lives of many of my constituents. The right hon. Member for Blackpool, North (Sir T. Low) said that he takes some comfort, along with the majority of our people, at the success of the policies that were announced by the Government in September.
I have not found that to be so in my constituency. I have not found it in most of the places in the country where I have been. On Thursday of last week 300 steel workers in my constituency were


given a week's notice. These 300 men and their families are seriously worried, but so are all the other men in that steelworks, because the 300 who have been given notice are employed in the first stages of production and other men believe that when their part of the work is finished they can look forward to getting their books one Friday night.

Mr. Jack Jones: It ought to be bought to the notice of the House that what is happening in the hon. Member's constituency is happening all over the country and that the national executive of the union concerned has called a special meeting for next week to deal with the problem.

Miss Herbison: I am delighted to hear that, but it is what I expected from that union. I understand from my inquiries that this is happening in certain places in Wales and in other places outside Scotland.
From the information I have been able to collect, there is no doubt that the unemployment among steelworkers today is a direct result of the restrictive policy of the Government. This afternoon the Chancellor of the Exchequer spoke about increased production. The right hon. Member for Blackpool, North said that we wanted increased production of the right product at the right time. Those constituents of mine and other workers throughout the country will wonder what the Chancellor means when he asks for increased production.
These men have always worked hard. No complaint has even been made by the firm about their rate of production. They were willing to continue with that rate and to increase it if possible, but they are now unable to do so. I am informed by the management that orders have been cancelled and that other firms have postponed their orders from the first quarter to the third quarter of the year.
Many of the firms which deal with this steel work are small firms making important goods for the home and export markets. The right hon. Member for Blackpool, North is wrong when he says that the policy of the Government is to get increased production of the right product at the right time. That is exactly what is not happening, because of the Government's policy. Because of

their indiscriminate credit squeeze, whatever can reap the highest profit is produced, irrespective of whether it is needed in this country or in Commonwealth countries.

Sir T. Low: Will the hon. Lady kindly explain why our exports have gone up and up and up?

Miss Herbison: Comparing the increase in exports between 1945 and 1951 with that between 1951 and 1957, I should ask the right hon. Gentleman why our exports have not increased by a much greater extent under this Government and why our share of the expanded world market in certain goods has gone down compared with that of other Western European countries.
If the Chancellor wants increased production, the Government will have to change completely from the present policy of deflation, with its disastrous results for many, many thousands of people, to one of expansion not only for the benefit of the people about whom I have been speaking, but for the whole future of the country.
I turn to my second example. The percentage of unemployment in Scotland is very high compared with that of the United Kingdom. In November, 1957, it was 2·6 per cent. of the insured population. In other words, 5,600 more men and women were unemployed than in November of the previous year and the figure is continuing to rise.
Lanarkshire is a Development Area. I am glad that my hon. Friend the Member for Bothwell (Mr. Timmons) is in his place. In his constituency there is a firm producing heavy tractors, while in my constituency there is a very new firm producing the engines for those tractors. Shortly before the Recess, I saw the Parliamentary Secretary to the Board of Trade about this matter and took with me a representative of the firm. We tried to show how the work of this firm was being jeopardised by the issuing of licences by the Board of Trade for the import of the very same type of tractor from America. Although we are often told about the seriousness of our dollar position, that interview was most unsatisfactory. Neither I nor the representative of the firm could believe that we had been listening to a Minister of the Crown.
Since that interview further information has been supplied to the Board of Trade to show that many of the comments then made were correct. We still await a considered reply to letters of 18th and 31st December. I do not want to give details of this case, because I do not want to do the country grave discredit. I have the information with me and the President of the Board of Trade also has it.
Those are examples of how in the one instance the indiscriminate credit squeeze, with the 7 per cent. Bank Rate, is squeezing work out of my constituency and out of many others. I have been informed that some of the smaller industries which have had to cancel orders or postpone delivery cannot get overdrafts from the banks and in some instances are paying 12½ per cent. interest on borrowed money. In an economic and financial situation like that, it is no wonder that there is a lack of production and that we are falling behind other countries in Western Europe.
For the sake of my constituents and for others, wherever they may be in Britain, I ask the Chancellor to have the whole matter thoroughly examined, and I beg him to have discussions with the President of the Board of Trade about the tractor factory which I have mentioned.

8.9 p.m.

Mr. Martin Maddan: Listening to the hon. Member for Lanarkshire, North (Miss Herbison) I began to feel, despite the fact that the hon. Lady was talking about exports and imports, that the country was riot really dependent on its overseas trade. The simple fact is that we must be competitively efficient. We do ourselves no service by making products which are more expensive than those of other countries, either for our own consumption or for export. As my right hon. Friend the Member for Blackpool, North (Sir T. Low) said, it is a matter of the right goods, at the right time, and at the right price—which is the third of the desiderata which he mentioned.
We should be focusing our attention on what Government policy would encourage competitive efficiency at home, strengthen exports, increase and strengthen our balance of payments and the strength of sterling. It is true that the

hon. Member for Stechford (Mr. Roy Jenkins) seemed altogether to write off the position of this country as a trading country and as a banking country for the world. In listening to the speeches of hon. Members opposite, I began to wonder whether they really did not have in their minds the idea that this country is a cosy little third-rate nation.
On the one hand, I am perfectly certain that my right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft) was right when he said that we must not do too much, but, equally, we must not set our sights too low, and this, in effect, was what I detected in the speeches from the opposite benches, though not in actual words—about production being too low and all the rest of it.
The effect of the policy which hon. Members opposite have enunciated would be to reduce the competitive efficiency of our own industry and so, therefore, in the long run, the standard of life of our people and the economy of the country.

Mr. Ellis Smith: Who suggested that?

Mr. Maddan: The hon. Member asks "Who suggested that?" It is implicit in the very words which were spoken in asking the Government to restrain the import into this country of goods which are cheaper than those which we ourselves manufacture. Unless we can brine our own industry into a state of competitive efficiency, we shall not have a hope of ever competing in the world, and this country, above all others, depends for its existence on overseas trade.

Mr. Arthur Lewis: The hon. Member is suggesting that if only we produced more goods that would be the best way of maintaining and expanding the export market. One of my hon. Friends has pointed out that one firm was having to pay 12½ per cent. interest on an overdraft to finance its goods. If it has to do that, how can the firm be competitive in world markets?

Mr. Maddan: That brings me to consider one of the points made by the Leader of the Opposition, who skated over the question of devaluation as if it was of no importance, as, indeed, did the hon. Member for Stechford. The fact is that our position as exporters is severely wounded if our currency is not strong, and our position as importers is also severely wounded if the currency is not


strong. Therefore, first, must come the strength of our currency. I am certain that the measures which the Government have taken to strengthen our currency are absolutely right and must be given first priority.
My right hon. Friend the Chancellor of the Exchequer opened this debate with a speech of extreme modesty which makes me feel that I myself, in any contribution which I make, must be equally modest. I hope that if I give any advice or counsel, it will be accepted in that spirit, but what I want to say is simply this. I believe that the success of the Government's policies will stand or fall in so far as all sections of the country—nationalised industries, private enterprise, the trade unions, the banks and the local authorities—all understand that the Government mean business and are doing unto themselves what they wish to do unto others.
This seems to me to be a very important principle indeed, and I hope that there is time between now and the time when the Estimates are presented for the Chancellor to examine these Estimates, as I know he is doing, most carefully to see that the Estimates presented to us enshrine this principle that the Government, at whatever inconvenience, are imposing upon themselves the same restraint as they enforce upon and ask of others.
I would end by saying that in all the happenings of the last two or three weeks nothing gave me greater strength and confidence than the words of the new Chancellor suggesting that, though there had been a change of Chancellor, there had been no change in the Government's financial or economic policy. It is because I believe that it is the intention to make these words ring true that I shall certainly support my right hon. Friend in the Lobby tonight.

8.16 p.m.

Mr. John Cronin: I found the speech of the hon. Member for Hitchin (Mr. Maddan) very interesting, and his obvious admiration for the former Chancellor, and his knowledge of economics might well make him a candidate for the post of Economic Secretary to the Treasury where there has been declared a temporary vacancy, but I appreciate, as one of my hon. Friends has suggested, that we want to give the present Chancellor a chance.
I think many of us on this side of the House are sorry to see the right hon. Member for Monmouth (Mr. P. Thorneycroft) leave the Treasury Bench, and for entirely personal reasons. He is often very agreeable and stimulating in his speeches and he showed an act of considerable courage in resigning, but I think his courage will pay him very handsomely in the long run. It is quite obvious that he has been forgiven. The very high feelings generated have been put through the decompression chamber of the 1922 Committee, and all is well as far as he is concerned.

Mr. Sydney Silverman: The devaluation chamber.

Mr. Cronin: There is no doubt in the minds of most people that the Government will come to a sticky end, but the right hon. Gentleman will be in the strong position of being the prophet who said, "I told you so."
I should like to express my appreciation of the speech of the right hon. Member for Monmouth today. It was a very dignified and moving speech, but I do not think that he ought to escape the consequences of a speech recommending really wrong policies. I should like to extend to the new Chancellor a very hearty welcome to the Treasury Bench. We are very pleased to see him there, and all of us feel the greatest respect for his newly-won laurels. He is in a rather difficult position. He has followed a person who took rather a tough line, and has also followed a partial party split, and therefore he will be obliged to take a tough time himself and will have very little initiative.
The Chancellor's speech today gave little encouragement for the economic future of the country. He said that the mixture is to be the same as before. As far as the Cabinet crisis was concerned, he drew a veil of obscurity over a situation of considerable ambiguity. The Government's measures are somewhat of an anti-climax, as indeed the whole debate must be something of an anticlimax, in that everything is continuing as before, with, as my right hon. Friend the Leader of the Opposition pointed out, the same standstill on investment. We have for several years been one of the lowest net investors among all industrial countries, and the situation is getting worse.
It is probably worth looking into the reason why the United States is holding a commanding position in world markets. The reason is very clear. It is that it has the highest standard of capital investment. It is true that there are other reasons, such as that the Americans are stronger on standardisation and specilisation and also on the simplification of industrial processes, but investment is the keynote of their success. It is also the keynote of the success of countries like Germany and other rising industrial countries, and it seems unfortunate that we are falling so sadly behind and that investment in this country does not make any real accretion as the years go by. It will put us in a progressively more difficult position competitively in world markets and when we enter the European Free Trade area, if we do, we shall be at a very severe disadvantage as compared to other countries who have much higher investment standards.

Mr. Ellis Smith: We are investing in armaments.

Mr. Cronin: I shall not pursue my hon. Friend's point. The Chancellor will continue the policy of reducing the supply of money, but if he looks at the figures he must be aware that the totals of bank advances have remained the same year after year, for the last few years. The supply of money has been quite stationary, and yet there has been no change in the steady rise in prices. The Chancellor intends to continue, so far as we know, the 7 per cent. Bank Rate. This seems to me to be a real example of burning one's house to cook a chop; the advantages of a Bank Rate of 7 per cent. are so small and the disadvantages are so multitudinous and embarrassing. Most of us are familiar with them—the increased cost of Government expenditure; the increased burden on our balance of payments; the effect upon Commonwealth countries who are driven to obtain their capital from abroad; the loss of acceptance and other financial business in this country and, worst of all, the effect upon social investments, such as housing and local authority finance.
All these measures, of a capital standstill, a reduction in the supply of money and a raised Bank Rate, have been tried in the last few years, with a continuous and uniform failure. There has been a steady increase in prices all the time

that they have been tried out. Why is the Chancellor going to pursue them and reinforce what is already a failure? Is he going to press his attack upon investment to the extent of producing substantial unemployment? That is the only fiscal policy which has not yet been tried. It is important that we should be able to understand his policy much more clearly.
Alternatively, will the Government make substantial cuts in the social services? This, again, is a situation which is somewhat obscure. The only comforting matter is that members of the Government now realise that substantial in-employment and cuts in the social services are unpopular. That has resulted in the present Cabinet crisis. Will the Government carry through their policies of substantial unemployment and cuts in the social services, or will they just bump them up? If they are going to carry on with these unpopular measures they will lose more and more support and there will be more Cabinet crises. The Government will be like the pig who is swimming—with every stroke they will cut their own throat.
I now turn to the question of maintaining the stability of the £ abroad. It is very easy to criticise, but I want to try to make some constructive proposals. I suggest to the Chancellor that he should bear in mind the psychological effects of these measures—and particularly of the Bank Rate. There is a general feeling abroad that a certain amount of panic runs through the Treasury. We have not had a 7 per cent. Bank Rate for about 20 years, and it has certainly not been imposed for such a long time for 40 years. It is a natural conclusion on the part of foreign countries that our economic situation is the worst it has been for forty years.
There is a definite element of panic about the Treasury's reactions to the September crisis. That crisis was brought about by a temporary strengthening of the mark and a weakening of the franc, with a general fear of devaluation—but that crisis is now passed. The £ is strengthening, not because of the short-term capital coming to this country but because there is bear closing by overseas financiers. The crisis has moved away, and there is now no reason for panic. I recollect during the war a famous flag


officer in the Mediterranean hoisting the signal:
Pro Bono Publico; No Bloody Panico.
I suggest that that motto, translated into Civil Service language, might be hung in the Treasury and the Bank of England.
I hope that the Chancellor will direct his attention to the control of movement of capital. We know that it is undesirable to control capital movements too much in the sterling area and in overseas countries, but capital has been absurdly free during the last few years. A very simple example is shown by the loss of £70 million—I recollect that a Government spokesman gave that figure—of capital which had gone to Canada and the United States in the first six months of last year, largely for the Kuwait gap. Of that £70 million flight of capital which went to America, practically all was invested in American securities which have been reduced to 50 per cent. of their value in the meantime, so that £35 million has disappeared into thin air as the result of the former Chancellor's policy.
We all know that the situation of our gold reserves is a very precarious one. In spite of every effort on the part of the Government they have been steadily shrinking. If one thinks of the capacity and the success which the present Chancellor had for shrinking the gold reserves we realise that the savages who shrink human heads have nothing on him at all. We must face the fact that our gold reserves are very inadequate for the burden which is placed upon them. Every Government, including Labour Governments, have attempted to build up the reserves, and yet, in post-war years, especially recently, there has been a very steady decline.
Is it possible for us to build up the reserves to an adequate level? Is that a burden that we can carry? Our gold and dollar reserves form about 4 per cent. of the total liquidity of the gold and dollar reserves of the world, and yet nearly half the world trade is done in sterling. If we increased our gold reserves by a marginal extent would it really be enough to cope with this enormous trade which is done in sterling? I very much doubt if it is possible to do this simply through improved terms of trade. In order to make our gold reserve

adequate it seems that it must be increased by a substantial and not by a marginal amount. The only way in which that can be done is by some form of loan from creditor countries. There would be a strong case for getting the creditor countries to realise that they have responsibility for maintaining the currencies of the world so as to keep world trade going.
Is it possible for the Chancellor to approach the United States and other countries to see whether the International Monetary Fund could be enormously strengthened by proper arrangements so that, in the sterling area for example, we could take advantage of the liquidity available to stabilise currencies? If the United States could be made to realise its responsibilites, the fear of crises every year would be dissipated and our potential reserves would be multiplied.
It is obvious that any responsible Government must do some really hard thinking if they are to reduce inflation. I know that Government supporters are very much opposed to controls. They have no objection to controls imposed by bank managers, but strong objection to controls operated by civil servants. Certain controls would be helpful. In general, controls have the great disadvantage that money affected by them may be diverted to other objects, or the spending of it temporarily delayed till a later stage. Certain other controls, such as building licences, would not have that effect. A firm proposing to put up a new factory would not dissipate the money. It is possible to introduce controls upon machine tools. Such controls ensure that investment is canalised into the best channels for our balance of payments.
The right hon. Gentleman said he felt very strongly about using the Bank Rate, but there is no objection to doing so. Why must there be a rigid rate for every possible use? Could there not be a differential rate, with different rates of interest for, say, the sterling area and for social purposes like housing in this country? It is not beyond the wit of the Treasury to devise a scheme for a differential Bank Rate. The same principle could be adapted to fiscal policy; a differential investment allowance would ensure investment being directed into the right quarters.
It is impossible to approach the inflation problem without facing the centre of it, the wage-price spiral. That is at the core of inflation.

Mr. Ellis Smith: What about defence expenditure at £1,500 million a year?

Mr. Cronin: I accept my hon. Friend's correction.

Mr. Ellis Smith: Why not say so?

Mr. Cronin: To a limited extent no responsible Government can ignore defence. Something has to be done.

Mr. Ellis Smith: Nobody suggested anything different.

Mr. Cronin: I would support substantial reductions in defence expenditure.
Returning to the wage-price spiral, one has to face the fact that a Government attempting to control inflation must come to some sort of agreement with the trade unions. There is no escape from that situation. Are the present Government in a position to face the trade unions? Almost every act of the Government since they came to power has been an attack on the standard of living and the future comfort and domestic life of the workers. Can the Government really expect the trade unions to do them favours? One does not hand money to a beggar who is picking one's pocket. A new Labour Government must do a deal with the trade unions. One cannot go into details about that now, but certain general principles must be borne in mind. One is that the Government must take effective action to keep prices steady. The unions would insist on rent controls and dividend restraint, that there be restraint in the luxurious living brought about by inflated expense allowances and that there be action against these large monopolies that keep up prices. Obviously the unions would insist on that, and would insist that there be social justice in financial and monetary policy. There should not be unjust poll taxes, like increased National Insurance contributions, nor Purchase Tax on necessities.

Mr. Awbery: Will not the trade unions also want a stabilisation of incomes over £30 or £40 a week? Would they bring all lower-paid workers up to that level?

Mr. Cronin: That is the authentic voice of the trade unions speaking. I think

trade unions would expect, as a condition of a deal with the Government to stabilise wages, to have social justice in legislation and that there would not be such travesties of equity as the Rent Act. The trade unions would also want to be- sure that there would be a high standard of investment in industry so that the future of the workers would be ensured by a high level of employment. I do not think the present Government has much chance of making a deal with the trade unions.
What will the Government do? What is the future? No doubt we shall hear from the Lord Privy Seal about that. It seems to me that there are three possible ways of controlling inflation at home. The first possibility is that the fiscal and financial measures used at present should be discontinued so that there will be no serious or substantial unemployment. Another possibility which would please the Lord Privy Seal is simply to amble along and hope for the best. It may be that the Government will take the same view as the doctor in Lewis Carroll's poem, namely,
They murmured as they took their fees.
There is no cure for this disease.

The Secretary of State for the Home Department and Lord Privy Seal (Mr. R. A. Butler): Hilaire Belloc.

Mr. Cronin: I am not sure that I will accept the right hon. Gentleman's correction.
The Government have either to accept the gentle policy of doing nothing and simply ambling along to please the Lord Privy Seal and his adherents or to adopt the tough policy which will lead to substantial unemployment, which would please his right hon. Friend the Member for Monmouth and his adherents. Alternatively, they could take a third sensible and intelligent line.

Mr. James Griffiths: Get out.

Mr. Cronin: When the Prime Minister returns from his tour, before those oriental garlands round his neck become faded they should ask him to accept to perform a useful act of euthanasia and dissolve Parliament.

8.39 p.m.

Mr. David Price: It gives me great pleasure to follow the hon. Member for Loughborough (Mr. Cronin) for two reasons. The first is because the


last time I followed him we were both in Paris and we both endeavoured to make speeches in French. I do not know whether we made those speeches with the same success that we endeavour to make speeches in this House. Secondly, during his remarks the hon. Member asked for a constructive proposal for managing sterling. I hope that during my own remarks I will put forward a few suggestions which will commend themselves to my right hon. and hon. Friends and, indeed, to right hon. and hon. Gentlemen opposite.
I should not like to let this occasion pass without paying tribute to my right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft) and to my colleagues who resigned with him. The burden of office in contemporary times is great on anybody, and that is particularly true of right hon. and hon. Members who hold the office of Chancellor of the Exchequer or who are Treasury Ministers. Anyone in such office needs the sympathy of the House when he finds that he is unable to carry on.
I believe that the best tribute which can be paid to my right hon. Friend is the improvement in the economy since the September measures were announced. I grant that that improvement has been modest and marginal, but nonetheless I think it has done my right hon. and hon. Friends credit. In the first instance, the £ is stronger than it has been in recent years and there has been a happy improvement in exports. The physical trade gap in October was £70 in November £22 million and in December £19 million. Let us admit straight away that much of that is owed to an improvement in the terms of trade. We have also seen a modest gain in the reserves. At the low point of September they were down to 1,850 million dollars and by the end of December they had risen to 2,273 million dollars. These are very modest gains.
The main problem of the economy remains with us and it is that we are a debtor nation. I think some hon. Members have rather forgotten that when they have been obsessed too much with our success on current account. It is no good looking at current account. We must look at the capital account.
On the last occasion on which I had the good fortune to catch your eye, Mr.

Deputy-Speaker, I endeavoured to point out to the House how very serious was our external capital position and that we are a debtor nation, but I cannot help feeling that some hon. Members mirror the words of the American author, Austin O'Malley,
The habit of debt is very injurious to the memory.
We must always remember that we are a debtor nation; we are not self-sufficient and we live on our exports.
The main problem has been that home demand has been in excess of our ability to satisfy it. The last time I caught your eye, Mr. Deputy-Speaker, I pointed out that we have certain economic aims which could well be concentrated, and I should like to repeat these because I believe they have relevance to the disagreement which took place between some of my right hon. Friends. Our first economic aim is to pay our way in the world on current and capital account. Our second is to maintain the internal and external value of the £. Our third aim must be to maintain a sufficiently high level of investment to ensure that in an age of rapid technological change British industry remains competitive. Our fourth aim must be to maintain a high level of employment of all our economic resources. [HON. MEMBERS: "Full employment?"] Hon. Members are playing with words. What do they mean by full or high employment? I refer to all resources, not merely men.
The problem facing anyone running the economy is to strike the right balance at any one moment. Unfortunately, economics is not an exact science; in fact, it is barely a craft. The problem, therefore, is to have flexible policies. When one also introduces the idea of expansion—and I am an unrepentant expansionist—it makes the problem of striking that dynamic balance even harder, and that is why I would not disagree with those who say that the recent dispute was one of judgment rather than of principle. This is a time of pause in expansion—reculer pour mieux sauter. There is a pause to get the supply and demand of resources and money into balance. I believe that that has been the policy of my right hon. Friends, both those who have resigned and those who are now on the Treasury Benches.

Mr. Herbert Butler: Why did they resign?

Mr. Price: The country must get used to flexible policies. I hope that the House noted the speech made by the Governor of the Bank of England at the Mansion House dinner when he tried to warn the country that they must get used to fairly frequent changes in the Bank Rate. It was not a question of everything being all right and then suddenly everything being all wrong. I should like to quote his words. He said:
Unless we can all accustom ourselves to adjustments of Bank Rate to the requirements of the moment without heralding minor reductions from crisis levels as a signal for new excesses of spending, Bank Rate will gradually use its utility.
That, as I see it, is the difficulty with public relations in this regard—if the Bank Rate is lowered a little, or if there is any form of relaxation, everyone immediately says "Everything is all right." Because of our external position, everything will not be all right.
I come to how best to deal with the continuing problem. I believe that my right hon. Friend was absolutely right to try to bring monetary demand into line with production. We have heard a lot today of the necessity to increase production. I agree entirely, but with a qualification that has not yet, I think, been made. Increased production must be on the basis of productivity and of profitability. It must not be production at any price. If we think of agriculture, there are all sorts of things that we could grow, such as pineapples in the Orkneys—but at what expense?
This obsession with mere flat out production is wrong, and I am sure that the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell) would agree with my qualification. I am sure that he would agree that there is a danger in merely being obsessed by production for its own sake. In seeking for increased production, we have to ask ourselves, "Are we making a net gain of marketable resources by producing?" That gets back to the old-fashioned question, "Is the enterprise profitable?" I know that "profit" is a dirty word to many hon. Members opposite. If they would like me to substitute the word "productivity" I will do so, and hope that they will come along with me.
I also suggest that in present circumstances we cannot afford the amount of wage claims that are pending. I say that because, although I stand for higher wages, higher productivity and higher profitability, when we have—if the newspapers are correct—wage claims pending to the tune of £450 million covering eight million people I hope that one will not be accused of being guilty of being beastly to the trade unions if one says that to grant those claims in present circumstances would be an act of inflationary folly. I should like the right hon. Gentleman the Member for Huyton (Mr. H. Wilson), who is to wind up for the Opposition, to give a clear answer to this question. Does he believe that, in present circumstances, it would be right for our economy—not for any political party—for employers and Government to grant those wage claims? If not, I should like him to say so—

Mr. J. Hynd: Mr. J. Hynd rose—

Mr. Price: Perhaps the hon. Gentleman will excuse me. I have only six minutes left, after which I have promised to sit down.

Mr. Hynd: I have none.

Mr. Price: When wage increases do come, I should like to see them given, above all, to the craftsmen. I should like to see them get back their differentials. I know that that is unpopular with the general workers' unions, but I believe that in many industries the differentials are quite inadequate. I know that many hon. Members opposite agree with me in private, and I should like to hear them say it a little more in our economic debates.
To keep inflation under control, the most important thing that my right hon. Friend can do is to give us an overall balance in his Budget in April. If that cannot be done by reducing Government expenditure, then I for one—and I will stick my neck out on this—would be prepared to support increases in charges or in taxation that would bring the Budget into balance overall, because I believe that that is more important than a 7 per cent. Bank Rate for preventing inflation. I know that that is extraordinarily unpopular with many hon. Members on both sides, but I believe that, if one really wants to stop inflation, it is the only right policy.
Now comes the question of how one raises capital for the nationalised industries, having regard to the fact that a large part of the nationalised industries are being financed below the line. I know that some of my hon. Friends feel that that should not be covered by the revenue for the year, as it is a capital item. Until new arrangements can be made for financing the nationalised industries, they must be financed out of revenue; otherwise they would be financed simply by increasing Treasury Bills—which is inflation. I suggest to my right hon. Friend that he should consider whether we might alter all the Acts of nationalisation, allowing the nationalised industries to make sufficient profit so that they can, at least, find some of the capital for their own expansion out of their own resources, letting it be a charge on the people who use their products or services.
I believe that it is vital to encourage savings first. All of us who are expansionists realise the need for investment, but the other side of the equation is saving, whether by the Government, private persons or institutions. I should like to draw attention to a very important comment on this subject which was made in a pamphlet published by The Times two years ago, called "The Dynamic Society". The author, in speaking about increases in investment and saving in Russia compared with the Western world, said this:
The Russians have been far more Calvinistic in their Marxian predestinationism, far more Victorian, more forcibly austere and Puritanically thrifty, than any American or British capitalists at any time. They have also been more inhumane and hard-hearted towards human sufferings in what St. Paul termed 'this present time,' on behalf of 'the glory that is reserved' for every pure collectivist (of the Right or Left) who unfeignedly believes in the ability of the few men in power to raise the material stature of all men in the future, by planning it that way, and no matter what the cost to the majority of men in the meanwhile. The trouble is not that it is false. It is, alas, only too true. All history attests it.
That is the immense problem with which any democratic Government is faced, the problem of getting a high enough level of saving, in other words forbearance from consumption, in order to get the level of investment necessary to remain competitive in a highly technological age.
I suggest that, when the time comes for my right hon. Friend to be able to

relax, the two priorities which should come before an increased domestic consumption are, first, an increase in productive capacity, and, second, an increase in our reserves. I put the thought to him that, when that time for relaxation comes, we should start paying back some of the American loan, with an arrangement with the Americans whereby they will use the money to help finance development projects in the under-developed countries, thereby assisting in their problem of liquidity, providing more purchasing power in the primary producing countries which are faced with lower incomes as a result of the fall in commodity prices.
I wish my right hon. Friend and his colleagues, as I am sure the whole House does, every success at the Treasury. I hope that my right hon. Friend will be firm, flexible, and, above all, imaginative.

Mr. H. Hynd: The hon. Gentleman should make up his mind.

Mr. Price: I understand that the last person who attempted to take on the Treasury troglodytes in their caves—and there are many matters of detail we should like to see altered—was the late lamented King William III. I hope that a Devon man will be able to succeed where a Dutchman failed. I hope that my right hon. Friend will not allow the Old Lady of Threadneedle Street to be either his mistress or his servant but will ensure that she remains his partner.

8.55 p.m.

Mr. Harold Wilson: While I had a little difficulty in following the hon. Member for Eastleigh (Mr. D. Price) in the intricacies of Dutchmen, Devon, Threadneedle Street and mistresses, I felt that some of his concluding remarks would strike an echo in all parts of the House. Not only his reference to the under-developed areas of the world, but what he said about the Soviet technological challenge is of supreme importance and underlies the whole of this debate.
Behind all our discussions of finance, liquidity ratios, Government expenditure, and all the rest, the plain fact facing this country today is that we are being left behind not only in certain aspects of the technological struggle—in other aspects we are doing very well—but are being left behind in the battle for production. Year by year, at least for the last


three years, we have seen production rising sharply in Germany and we have also seen it rising sharply in the Soviet Union. There are many people in this country, perhaps a growing number, who feel that the Soviet industrial challenge—I do not know whether the Foreign Secretary agrees—may be an even more formidable question than the military challenge with which the right hon. and learned Gentleman and others have been concerned for some years.
The country expected this to be an important debate. Up to now, at least—I cannot speak for the Lord Privy Seal and myself—I think it has fulfilled expectations. The speeches both from Front Benches and from the back benches throughout the debate have been extremely important. We had, for instance, the maiden speech from the new Chancellor of the Exchequer. He told us that he was perplexed and confused, and I think we can leave it at that.
The right hon. Member for Monmouth (Mr. P. Thorneycroft), the retiring Chancellor, made a speech which, I think, moved everyone who heard it, in all parts of the House, by its sincerity and its statesmanship, even if there was obviously a great deal in it which we on this side cannot accept. The right hon. Gentleman said that he would support the Government Motion, which he found unexceptionable. Perhaps he found it unexceptionable because it is drafted in extremely unusual terminology. It does not even ask for the confidence of the House, which, one would have thought, would be usual in the present circumstances. It merely asks the House to support the Government in their resolve, but it does not go so far—perhaps the Government felt that it would be a very chancy thing to do in present circumstances—as to ask for the full confidence even of their own side.
The resigning Chancellor had a great deal of support from his hon. Friends who succeeded him in the debate, even if some of them—one thinks particularly of the hon. Member for Solihull (Mr. M. Lindsay)—made it plain that they will be voting tonight for the Government albeit with a very heavy heart. In the case of the hon. Member and of certain others it was plain that, though they will give support to the Government in the Lobby, they really oppose the attitude of the

Government over the recent resignations. Hardly a single hon. Member has spoken in favour of the Cabinet against the resigning Chancellor, except, possibly, the right hon. Member for Blackpool, North (Sir T. Low), who made a sincere and convincing speech which managed to support both sides in the dispute at once.
If it does anything at all, this debate marks the end of the legend that Tory freedom works. The resigning Chancellor today spoke of slithering from crisis to crisis, of a nation in full retreat and of the road to ruin. We have just had over six years of Conservative Government, in the easiest conditions that this country has known in world economic affairs at any time since before the First World War. [HON. MEMBERS: "Oh."] Yes, until the past few months or weeks.
We all read the letter which was sent by the right hon. Member for Flint, West (Mr. Birch) when he resigned from the Government, in which he said that the events of the year showed not only that foreigners were losing confidence in sterling, but, more important still, people at home were doing the same. The right hon. Gentleman's former colleagues will probably agree that it was not only on grouse moors that Nigel was very depressing.
After six years, then, despite 1,700 million dollars of special aid in the past two years the reserves are still 700 million dollars below what they were in 1951. The £ is temporarily strong for seasonal reasons and because of bear covering, but it is, as we all recognise, and as the right hon. Gentleman the Member for Blackpool, North said very forcibly, facing its greatest test in the autumn with the reserves so far quite inadequate to meet any strain of the kind that we had to face last year.
Not only is the position to be judged in terms of the reserves, but also in terms of a world now facing deflation and growing competition—and the Chancellor was right about keener competition that we shall have to face—when Britain's economy, as my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) said, is stagnant and production is no higher now than it was at the end of 1955.
Of course, if one legend has ended, there are other legends springing up to take its place. During the past fortnight


the Conservative Central Office has been trying to put out a legend combating the strong influence of the former Chancellor of the Exchequer, the legend that this Government and particularly our egregious Prime Minister stand forth as the guardian of the social services against the slasher from Monmouth. That was the view put forward by the Prime Minister, by the Lord Privy Seal, by the Minister of Defence, by one after another of them immediately after the resignation of the former Chancellor of the Exchequer, and it was even, of course, put forward by the noble Lord who is the Chairman of the Conservative Party.
Well, we shall see. We still have to see the Estimates for the social services. We still have to see what cuts have been made. Ministers have been at great pains today, the Chancellor and the whole body of his supporters, to make quite clear to the Conservative Party that they are just as resolved as the ex-Chancellor to make the cuts that they consider to be necessary. Apparently there is still some disagreement on this matter of social services expenditure, so we cannot expect the final report from the Lord Privy Seal tonight.
However, if this is the new legend with which the Conservative Party is going to the country no one on this side of the House and few people in the country will be impressed with the claim that the Prime Minister is the guardian of the social services. He is the man who, as Chancellor, imposed the meanest and most vicious of all the cuts there have been—the prescription charges for the old-age pensioners and the chronic sick. That was done by the present Prime Minister. It was announced on 25th October, 1956, only five days before the Suez invasion. That was for £5 million, not the £50 million which the Prime Minister now describes as "chicken feed." That was for £5 million and we all know, every one of us, that it has caused very great hardship.
Six months after that decision the economic position was supposed to be so good that the then Chancellor of the Exchequer, the right hon. Member for Monmouth, felt able to give away £35 million to the Surtax payers, and another £35 million to big business in the overseas trading corporations "fiddle," which is

now yielding very big results to some companies. The former Chancellor was not putting the £ first in the queue when he did that. Yet he could not find, and the Prime Minister did not direct him to find, the £5 million necessary to avert the prescription charges. So let us hear no more of the Prime Minister's claim to be defending the social services against the right hon. Gentleman the Member for Monmouth.
Another reason why we are not impressed by this claim is the recent speech of Lord Hailsham, Chairman of the Conservative Party, calling in question every measure of social advance since 1945. If the noble Lord is to be taken seriously—and one never knows; he may be—everything seems to be lined up for another May committee; and that is not the only parallel we can find between the present situation and that of 1931.
Another legend which has been developed in the course of the debate, and more particularly in the fortnight preceding it, is what might be called the Peter the Great legend. The right hon. Gentleman, very probably to his surprise because he knew the situation that would face him when he resigned, has suddenly become a hero, at any rate, in certain parts of the Conservative Party.
I was glad to see what a thunderous reception the right hon. Gentleman had in his constituency:
Men crowded round him, patting his back and gripping his hand … and women kissed him … When he left … a crowd surged round him on the pavement outside, still cheering him and patting him on the back.
We were delighted to read that. Nobody felt like kissing him when he was in the Treasury. It must have been very pleasant. But it is not only to this osculatory triumph that I am referring. He has suddenly become the hero of all the hard-faced men in the City who have done well out of Tory freedom—often to the detriment of the national interest.

Mr. Osborne: Even in the timber trade.

Mr. Wilson: The hon. Member has been trying for six years to get that one in. I will just say to him that the position of the timber trade under Tory freedom has been about as depressing as the position of the Lancashire cotton industry, and the hon. Member ought to


know something about that industry. I am sorry to say that the hon. Member chose the wrong trade for that one.
We have had the legend created that in the Chancellor's year of office; thanks to his great courage, the £ was saved, we have had the highest dollar rate for seven years and internal inflation has been checked. That is the legend that is being put around, no matter what view one takes of the right hon. Gentleman's resignation.
Lot us look at the facts. It has been my painful duty year after year, to present to the House a short, succinct and entirely objective record of each successive outgoing Chancellor that we have had, because in a little over two years we have had four Chancellors at that Box. Whatever the technical arguments about the velocity of circulation of bank deposits, the velocity of circulation of Chancellors is now an all-time record. Let us look at the record of the Chancellor who has just gone and let me compare the three years of the three Chancellors.
In 1955, under the Lord Privy Seal, the country lost 642 million dollars. He gets first prize. Out of the throe his loss was the smallest. In 1956, under the Prime Minister, allowing for borrowings at a special rate, the country lost 734 million dollars. In 1957, the right hon. Gentleman who has just resigned, lost 773 million dollars net, if we allow for all the sterling area borrowings from the International Monetary Fund and the Export-Import Bank, the American debt waivers and German aid.
Therefore, over the three years the three Chancellors between them lost 2,150 million dollars; and if it were not for those borrowings the reserves would be about 600 million dollars, or at just over one-fifth of the level at which they stood when this Government took office. There has been a loss in the last three years of 2,150 million dollars, and hon. Gentlemen opposite still like to talk about 1951.

Mr. Beresford Craddock: What about the £1,000 million loan from America which the Socialist Party lost in eighteen months?

Mr. Wilson: I can always count on the hon. Gentlemen to go on living very happily in the year or two immediately following the war. [HON. MEMBERS: "Cheap."] I say to him that one would

think, twelve years after the war, after six years of Conservative Government, that those problems would be a little easier to solve. I put this to the hon. Gentleman, also: from 1949 to 1951, the last three years of the Labour Government, we did not lose 2,150 million dollars. We actually gained 261 million dollars in those three years. That period included the devaluation year and 1951, about which hon. Gentlemen opposite—[HON. MEMBERS: "Marshall aid."] Those figures are net, after allowing for the whole of Marshall aid.
The record of production of this country under the ex-Chancellor was given by my right hon. Friend this afternoon—utterly stagnant, unchanged for two years, over the past four years increased by 15 per cent. against 46 per cent. in Germany, 43 per cent. in France, and 37 per cent. in Italy. Our exports were 2 per cent. up by volume last year. We had the worst record of and country in Europe in the three preceding years. Even taking that position at the bottom of the league, our increase was again almost the worst in Europe.
Is this a story of success? Inflation? The cost of living last year went up by 41 per cent., despite a fall of 13 per cent. in commodity prices and nearly a 10 per cent. fall in imported food prices. We warned the ex-Chancellor of the Exchequer that this continuing rise in the cost of living last year was not in spite of industrial stagnation, as in Tory mythology, it was because of it. As my right hon. Friend explained this afternoon, to hold that production unless you have very heavy unemployment is itself a cause of rising prices.
Now let us look at the dangerously complacent story that is being put round about the position of the E. There has been some improvement in the position of the £ since September, certainly. In fact, we forecast in the autumn that this was bound to happen. I said this:
I hope, also, that there will not be am, complacency either about what we hope will be the more reassuring gold and dollar figures for October and November. This is bound to happen. The extent of bear speculation and the postponement of trade payments was so great that there must be considerable covering. The further the tide goes out—and it went out a very long way in August and September—the higher it usually comes in."—[OFFICIAL REPORT, 29th October, 1957 Vol 401, c. 65.]


It was rather plain then that since the immediate threat of devaluation was ended there was bound to be a lot of heavy bear covering, and the tide was likely to come in a long way; but it has not come in yet anything like far enough. I am sure that the present Chancellor and the ex-Chancellor will agree about this. The gold reserve improvements of the past three months have nothing like replaced the gold losses of the summer and autumn. In this seasonally favourable period we are not building up anything like enough to meet the strains and the stresses we must expect to meet next summer.
There is no policy for increased exports and, meanwhile, as a result of all the measures described by my right hon. Friend, we are weakening the long-term position, because high Bank Rate and the capital investment cuts are damaging the economy at our most vulnerable points, industrial investment and our ability to compete abroad.
Now we must ask what are the prospects now? My right hon. Friend referred to the worsening in world conditions, of which we warned the Government last autumn. The fall in import prices can produce an illusion of improving balance of payments figures and, as we forecast, it is increasing the paper surplus, but, at the same time, it is gravely weakening the sterling area's dollar earnings. As the Chancellor very fairly said this afternoon, as we look further ahead it may very well threaten our export markets. Above all, looming behind all this, is the other thing to which the Chancellor referred, the shade of the American recession. We warned the Government a year ago that they were living on borrowed money and on borrowed time. Another year has gone by and nothing has been done to meet the foreign exchange crisis.
What hope does the Conservative Party offer in these circumstances? We have heard two views from the benches opposite today. As to the former Chancellor's resignation, it really is not for us to take sides in what is basically a clash between the Edwardian and Victorian wings of the Conservative Party—[Laughter.] Indeed, it would be very difficult for us to do so, because in this atmosphere of mutual recrimination and

partial disclosure of Cabinet secrets it is very difficult to know where the truth lies. If the Monmouth speech of the right hon. Member for Monmouth is to be believed, the statements of the Prime Minister immediately after the resignation fall even below his somewhat elliptical standards of the truth.
The Chancellor of the Exchequer himself told us this afternoon that he was still confused and perplexed about it. We can very well understand that, but what we want to know is whether the Government are strong enough to face the problems that the country is facing. Is the Lord Privy Seal entirely happy about this? He has been baby-sitting now for a couple of weeks. We remember what he said as recently as last November. He said, with that characteristic modesty which is one of his most charming attributes:
We believe that our record especially in the years 1953 and 1954 when we managed to balance the economy between production and demand, can be repeated again.
He went on:
If there is any one man who can repeat it, it is my right hon. Friend the Chancellor of the Exchequer."—[OFFICIAL REPORT, 12th November, 1957; Vol. 577, c. 914]
The least the Lord Privy Seal can do tonight is to say the same words of encouragement to his right hon. Friend who has succeeded to the Treasury.
My right hon. Friend this afternoon referred to the divisions in the Government. Let us look at them. The Government Front Bench, in the last fortnight, has looked like nothing so much as a gang of cornered malefactors all blaming one another and wondering who is to be next to turn Queen's Evidence. In fact, we understand that there are one or two candidates for the post mentioned in this morning's Press. In this shifting constellation one fixed point is at least the Foreign Secretary.
The divisions in the Government go right down to the lowest levels. Even the Parliamentary Secretary to the Ministry of Works said of his elders and betters in the Cabinet—they are his elders, anyway—
They all ought to have their heads knocked together.
We may very well agree with that, but I do not think that it is for a Parliamentary Secretary to say so.
Then the new appointments: they are scraping the bottom of the barrel there. The new Parliamentary Secretary to the Ministry of Power, the hon. Member for Oldham, East (Sir I. Horobin), said of the ex-Chancellor's resignation:
I regard it as a disaster. It will do irreparable damage to the party … it seems to me indecent for a Government which has quite rightly asked everyone to limit expenditure to say, in effect, 'We are going to have a small, illegitimate baby' and hope that no one will notice.
That is what he said about his new colleagues—"disaster", "irreparable", "indecent". [An HON. MEMBER: "He is a bachelor."] In wishing the hon. Member well at the outset of his Ministerial career, I must say that if his vocabulary for describing his colleagues is as good as that, he is liable to go very far and will probably be Lord Privy Seal.
So much for the team. What of the policy which this Government have to offer? Basically, of course, there is no change. The Government still intend to fight the menace of the demand of inflation when this country and the world are facing the danger of deflation, as my right hon. Friend said. The Chancellor himself has shown this afternoon that he is imbued with all the usual War Office enthusiasm for fighting the last war but one. The Government's line is that the great danger to sterling comes from internal inflation and especially from wage demands in this country, so that everything, especially investment, is to be sacrificed to deal with that problem.
As my right hon. Friend said, the Prime Minister threw away any chance which this Government had of an understanding with the trade union movement in 1956, when he forced up the prices of essentials, including rent, and refused to introduce even the most basic controls on less essential consumption and investment.
So now, in its place, we have the showdown policy. The present Chancellor, whose manner is very mild and courteous, nevertheless had some very tough words to use last weekend about this. He said:
The tough, drastic deflationary policies that the Government adopted in September will be continued without relaxation … The Government will not make extra money available for further inflationary wage increases, and our attitude in regard to those whom the Government directly employ will be in line with what we expect from others.

And with all that that means in terms of the attack on arbitration, good faith and collective bargaining.
The essence of this policy, as my right hon. Friend said, is to hold down production to the point where employment is endangered—and my hon. Friend the Member for Lanarkshire, North (Miss Herbison) made that point—and where essential investment is being restrained. They hope that at the end of the day, disregarding the need for a policy of social justice to make such things possible, the trade union movement will be in a position in which it will not be a question of what wage claims it makes; it will not be able to get them. The possibility of getting some understanding with the trade union movement, to which my right hon. Friend referred, has become immeasurably more difficult over the last two or three years.
I will not refer to the Report of the Tribunal tonight, because we shall be debating that next week. [HON. MEMBERS: "Why not?"] We certainly shall; we are looking forward to it, but I will say this. One of the significant facts about the evidence, and I am not dealing here with the evidence of the top people in the City, is the number of small operators who admit to coming in each day to the City and having a gamble in the hope of some tax-free capital gains, perhaps of a few hundreds here or a few thousands there. There was a long succession of them, and "they toil not, neither do they spin"—people who perform no useful services to the nation. What is the effect of this disclosure in making still more difficult the job of responsible trade union leaders?
We must make it plain that all this is a dream which the Government are talking about. The real fact is that we had a balance of payments surplus last year of quite reasonable proportions. We should have liked to have seen it still bigger, but it was quite respectable. Yet, at the same time, we had a heavy and almost disastrous run on sterling. It was the result of Tory freedom. [HON. MEMBERS: "No."] Yes. We are always told it is the little gnomes in Zurich, but we now know that there are quite a lot in London and Hong Kong. The rush to get out of sterling last summer was heavier in London than it was anywhere else. My right hon. Friend referred to


the Kuwait gap, and the rush to buy American securities by investment and financial institutions in this country.
This is the direct result of the removal of exchange control, of free, speculative commodity markets and of the decision of the Lord Privy Seal, in February, 1955, to use the gold reserves to prop up transferable sterling. This back-door convertibility has cost the country hundreds of millions of dollars, as we warned him it would when he introduced it. From 1954 to 1957, when in most years we had a balance of payments surplus of over £200 million a year, we lost, according to the Economist estimate, about 1,500 million dollars in capital movements of this kind.
The tragedy, both economic and moral, is that because of these things we have been borrowing from the poor countries, mainly in the Commonwealth, and lending to the rich countries, mainly in North America. That is not economic sense and it is not political sense. [HON. MEMBERS: "Nonsense."] It is a fact. Over the past three years this country has been borrowing from poor countries and lending to rich ones.
There is a parallel here with conditions in the 1920s. In those days, the problem was not so much over-valuation of the f, but borrowing short and lending long. In those days, British industries were being starved of essential investment in order that excessive amounts could be lent abroad. That is where present policies are leading us, and I suggest that the first thing the Chancellor should do is to face this problem of the control of capital movements from this country.
It was because the late Chancellor entirely failed to deal with that but, instead, put the screws on in this country by cutting down essential investment, and thought that he could solve the whole problem in terms of an attack on wage claims, that some of us said, last autumn, "The voice might be the voice of Thorneycroft but the hand is the hand of Montagu Norman."
My right hon. Friend referred to the loss of essential production. This policy of stagnation has cost the country about £2,000 million a year. If that figure is difficult for some hon. Members opposite to appreciate, perhaps I should say—it

might revive memories of some of their finest hours on the platform—that this figure is equivalent, in lost resources, to about five groundnut schemes every month.
It is for that reason that my right hon. Friend said that the first priority must be expansion. I agree with the ex-Chancellor that we are trying to do too much within the resources that we are creating, but the first priority should be expansion. When the Tories were in opposition the right hon. Member for Woodford (Sir W. Churchill) coined the slogan, "Set the people free". They got in and they set the wrong people free. That was why we have had a run on sterling, the Kuwait gap, an economic weakening in Commonwealth trade and all the rest. The right hon. Member for Woodford once said that he did not become First Minister to preside over the dissolution of the British Empire. That may be the case, but the Government over which he presided created the conditions which are rapidly leading to the dissolution of the sterling area and the Commonwealth as an economic unit.
The Tory Party's philosophical ideas never last for very long when they get into a struggle with cash nexus. They promised us a "Britain Strong and Free" in 1951. There is now a slogan going round, "This is anti-British and derogatory to sterling; but, on balance, if one is free to do so, it makes sense to me."
So our slogan should be not to set the people free but to remove the controls on expansion and, by the policies outlined by my right hon. Friend this afternoon, deal with any dangers of demand inflation which might arise as a consequence. What we need first and foremost is a resumed policy of expansion. The Lord Privy Seal tried it two years ago but failed, because he would not carry with it the controls necessary to prevent inflation. It is the failure to expand production and, above all, the lack of social purpose and the economic anarchy which makes it impossible for the Government to come to a real understanding with the active producers of the nation's wealth, which has produced the present crisis.
In an earlier outbreak of this now long-continuing crisis we warned the Government that they had lost the power


to govern. I am not sure that they have not now lost the will to govern, apart from the Prime Minister, who has "never had it so good." Every month this discredited and divided Government remain in office erodes still further the pennilessly low national reserves and makes still harder the task that we shall have of restoring the national credit.

9.31 p.m.

The Secretary of State for the Home Department and Lord Privy Seal (Mr. R. A. Butler): This debate has served at least one useful purpose. It has, for example, given leaders of the party opposite a chance to speak. We remember the words of the Daily Herald shortly after the recent events. It said:
Why the dead silence from leaders of the Labour Party …? The public is mystified by the absence of Labour views. It is time somebody spoke up.
They have at least said something today. I do not propose to go into detail in regard to the speech of the right hon. Member for Huyton (Mr. H. Wilson). He made three oblique references to the Tribunal Report. All I can say is that we look forward to that debate.

Several Hon. Members: Two days.

Mr. Butler: On that matter I might be betraying the usual channels by saying that I have already sent an answer to the Opposition that I will give them an answer tomorrow.
I was saying that when we come to that debate we shall remember the remark of the night hon. Member for Huyton about my right hon. Friend the Member for Fint, West (Mr. Birch) being on the grouse moors. We shall enjoy our shooting much more than the right hon. Gentleman enjoyed his.
The Leader of the Opposition was the only one to break his silence. He broke it shortly after the events that we are debating partially tonight to the extent of issuing a statement saying that the Government were crumbling and calling upon them to resign.
I can assure the right hon. Gentleman and his hon. and right hon. Friends—I have been reading the memoirs of Lord Attlee on the subject of resignations in his own Government and studying the story of Lord Attlee's Government which ran away from the financial difficulties in 1951—that, so far from finding that the Government are crumbling, he will

find here a united front and an unassailable square against which he will direct his fire in vain.
When the right hon. Member for Ebbw Vale (Mr. Bevan) resigned in April, 1951, he said that his party had been—these are his own words—
reinvigorated by it and not debilitated.
That was generous since, at the time, the party lost not only him but the right hon. Member for Huyton.
The sort of definite action of which we had an example today in the moving speech of my right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft)—I am not commenting upon the merits—and the manner in which my right hon. Friend spoke enhanced the value of our public life. Whatever views we may have, and it is obvious that we have had very definite differences between us, it is not unsuitable for me to say at the opening of my remarks that this debate has been dignified by events which add another chapter to the history of Parliament. We may all feel, using the words of the right hon. Member for Ebbw Vale that, following upon the speech of my right hon. Friend, we are re-invigorated and not debilitated. That applies not only to the House of Commons, but also, in particular, to Her Majesty's Government at the present time.
What do we find in the party opposite? We find that the renegades resigned on a comparatively small number of millions of pounds—not nearly as high as the £50 million that we have been talking about in recent days, but under the £20 million mark. The right hon. Gentlemen who then resigned are reunited in an uneasy alliance with the Leader of the Opposition. What is the basis of their alliance? They have pledged themselves to the most inflationary programme ever invented by a political party in modern times, costing hundreds of millions of pounds—far more inflationary than any we have ever experienced. This is a matter to which I may return if I have an opportunity before resuming my seat.
It is important that I should now turn to answering some of the points made by the Leader of the Opposition and by other hon. Members in the debate. Before I do so I should like to pick up another pearl which fell from the right hon. Member


for Ebbw Vale. He also said in Margate in October, 1951, after the distressing events:
The important thing is not that there are differences of opinion in the council chamber, but that there is unity on the battlefield".
That is precisely the position tonight. We are on the battlefield here and now in this debate. We intend to win an overwhelming victory against the other side. We also intend to win the battle against inflation. We do not intend to have an Election. We intend to see the job through, unlike right hon. and hon. Gentlemen opposite who fled from their task in 1951. We intend to stay and do our job, because it is in the interests of the House and the country that we should win.
May I also take up a sentence in the speech of my right hon. Friend the Member for Monmouth, who said that it is not only a question for us, but a question of the effect upon the living conditions of the whole population. While we may have our differences and divisions tonight, we must remember that this battle is one upon which the whole prosperity of our country depends. I say to my hon. Friend the Member for Solihull (Mr. M. Lindsay), who expressed anxiety about whether or not he could go into the Lobby—and I realise that there are hon. Members who are feeling like that—that on this issue the Government policy in defence of the £ is such that they can legitimately and honourably support it.
The Government welcome this opportunity to re-state their economic policy and to emphasise the unaltered character of its short and long-term objectives. These are, first, to defend the £ sterling as a strong and reliable currency upon which we and the world can count; secondly, to create the necessary climate of restraint and responsibility at home so that the battle shall be won and the highest possible level of employment maintained; thirdly, to resume, when we are ready, upon the firm base of an honest and trusted currency, the healthy expansion of our economy. It will, therefore, be seen, as was borne out by the Chancellor of the Exchequer in opening the debate, that a change of Chancellor does not mean a change of policy.
The policy which my right hon. Friend the Member for Monmouth commends is not a different policy from that of Her

Majesty's Government. [HON. MEMBERS: "Why did he resign?"] That is a matter for my right hon. Friend. The differences which have arisen are differences of emphasis, of timing, and, I believe, of patience. Such differences as recall words which I once read in the works of Ralph Waldo Emerson. Perhaps he was thinking about such differences when he said that men "boil at different degrees."
The present position of our economy is broadly as follows. We have greatly improved our United Kingdom trade balance. I am glad to say that our exchange rate remains high. We are still gaining reserves. Provided that we pay back what we have borrowed and go on to build up our reserves, we shall be in an improved position.
The "record" to which the Amendment refers does not take account of the recent trade figures, published this month, which show that in the past year our underlying trading position in the United Kingdom has been very sound. The figures show record exports for the year as a whole and a visible trade balance which in the last two months was better than for many years. In 1957 exports and re-exports rose by 5 per cent. to no less a figure than £3,458 million; that is a 2 per cent. rise by volume. This is in face of stiffer competition and increased restrictions on our exports to certain countries who are anxious about their balance of payments. This seems to me a pretty good advertisement for the working of Tory freedom. In fact, our exports have risen by 25 per cent. by value and 16 per cent. by volume in the last three years.
It is, I think, particularly encouraging that our exports to the dollar area were up by no less than 9 per cent. in 1957. That is a matter which has always caused anxiety to all those who have held the post of Chancellor of the Exchanquer or President of the Board of Trade. The visible trade gap, which had been reduced in November to the lowest figure for many years, was even lower in December. Taking our invisible earnings into account, there is no doubt that we had a substantial surplus on our balance of payments.
The Leader of the Opposition referred to a fall in import prices. Of course, this has helped, but I would point out that although import prices have been falling during the year from the peak which they


reached a year ago, the average cost of our imports in 1957 was 1½ per cent. higher than in 1956.
I turn now to our gold and dollar reserves and the strain on sterling. Thanks largely to the measures which we took under the initiative of the late Chancellor of the Exchequer, we faced the exchange crisis of last year firmly and resolutely. The economic measures which we took had an immediate effect. Every month since September our reserves have risen continuously, and the £ is notably stronger in world markets. So much for the preposterous claim that we have not established our record in this field.
I turn now to the Amendment. It refers to
… expanding production, full employment and a stable pound.
Hon. and right hon. Members opposite have questioned our capacity to maintain full employment every single year for six years. I remember the words of the right hon. Gentleman the Member for Blyth (Mr. Robens), whose prognostications proved to be totaly false. Extravagant prophecies on their part have always been falsified. We have had full employment all along, and last year the average level of unemployment was no more than 1½ per cent. In particular, the motor industry has staged an impressive and significant recover.
As to expanding production, there is, of course, no dispute about the general desirability of expanding production, but in the face of the undoubted inflationary tendencies that we have witnessed, it is essential to secure a stable base so that we can move forward again surely, resolutely and effectively.
I do not accept at all what the right hon. Member for Huyton says about stagnation at present in our production situation. Our production during the past few months, and over the past year, has, in fact, improved. It compares favourably with that of the great North American economies, and the second and third quarters of last year show figures of a higher production than ever recorded in the history of the country. When the right hon. Gentleman brings forward his usual league table, which he does at this time—and as he and the Leader of the Opposition do in almost every speech they make—I would point out that at the bottom of the league table stands the

United States of America, an economy of the most expansive and powerful type in the world.
I would take also some detailed figures—and I will come to the position of the United States in a moment. Manufacturing output for the first ten months of last year was 5 per cent. up on 1956. Motor car output made a spectacular recovery, and was nearly 22 per cent. higher than in 1956. In the first ten months of last year, mechanical and electrical engineering output was up by no less than 5 per cent.; food, drink and tobacco was up by no less than 3½ per cent., and agricultural machinery was also up. These are not the signs of stagnation, and the claims of the right hon. Gentleman that our production is stagnating simply do not bear examination at the present time.
Now I come to the point made by the Leader of the Opposition in relation to the position in the United States of America. According to our latest information, the figures of industrial production in the United States indicate a distinct percentage fall below the level of last year. I remember such a fall in 1953–54, when conditions were rather different, and when the United States administration took the most definite steps to cause a recovery in production. We have every confidence that they will take such steps now, but, in shaping our policies against this shifting background, it is obvious that rushed decisions, or once-for-all estimations of the situation are not appropriate today. In steering our course between the risk of acute deflation and the undoubted presence of inflation in the system, I must say—I will be perfectly clear—that our first and main task must be to win this present round against inflation itself.
I have no particular reason to quote The Times, but it is refreshing to find a sentence in its leading article today with which the Government most heartily agrees. It runs:
… it is not a had thing to finish stopping inflation before starting to revive it.
That leading article in The Times goes on to say:
… it is altogether too comforting to suppose that this country, with its tiny reserves, can spend its way out of a world recession.
I shall be coming in a moment to purely financial matters on the Estimates, but I should like to say in answer to my


right hon. Friend the Member for Blackpool, North (Sir T. Low) and to the hon. Member for the Stechford division of Birmingham (Mr. Roy Jenkins) that if we are to have increased production, and that is clearly the desire, as expansion should be the aim for any healthy economy, particularly our island economy, it must be from a base from which inflation has been eliminated, and we must provide a sure and sound basis on which we can go forward again.
I will also say this. I have probably had as many years as any one else in this House grappling with these problems. I am fully aware of all the difficulties. I am fully aware of ail the mistakes I may have made. I am fully aware of the great variety of advice available in the world from all manner of experts and statisticians. I voice here a sentiment expressed by my right hon. Friend the Member for Monmouth. Anyone who has ever held this burden is, I hope, modest about it.
When I attempted to give a fillip to the British economy, with such modest things as the investment allowance—they were really quite modest, and the Budget in which I introduced them was regarded as very dull and unimportant—I felt that they were at that time almost too much for the economy in that form. We cannot be too careful, before we give additional fillips or incentives, to ensure that we are not encouraging inflation instead of encouraging expansive demand and production. Therefore, I can speak from my own experience in saying that I am determined, as are my colleagues, to win the battle against inflation before we attempt to stride forward again.
I come now to next year's Estimates. The House will realise that I cannot give specific figures in advance of the Vote on Account. This is what has always made the prospect of this debate a difficult one. One cannot prove one's words by deeds. That harks back to Question Time and foreign policy. One cannot quote the figures.
Our purpose, which, I am convinced, will be fulfilled, is to contain expenditure on the Civil Estimates in line with the Prime Minister's letter to my right hon. Friend the Member for Monmouth, that is to say, within the figure he mentioned of the difference between the Estimates

for the coming year and the Estimates and Supplementary Estimates for the current year. I trust that, when these figures are published, we shall be seen to have done this in ways which will be thought to be fair, in view of the paramount necessity to restrict the volume of money and create the right climate in which to break inflation.
I have been asked, in the course of this debate, whether our policy on wages remains unchanged. I unhesitatingly repeat the words of the ex-Chancellor on 29th October last, when he said:
Wages increases unrelated to, and going far beyond, the general growth of real wealth within the country are by far the greatest danger we have to face, and we should be deceiving ourselves if we pretended otherwise."—[OFFICIAL REPORT, 29th October, 1957; Vol. 401, c. 57.]
So far as a Government can have a wages policy—and anybody who has studied the matter or been at the Ministry of Labour knows the limitations—it will be our duty by our example and by our actions to carry out that principle and see that it has its effect.
We shall achieve the results I have mentioned over the whole range of Civil as well as Defence Estimates. One or two hon. Gentlemen have mentioned the Defence Estimates. I forecast that we shall be seen, when the Defence Estimates are published, to have combined a holding down of expenditure with our aim of arranging our defence Forces on more effective and economic long-term lines. This, we believe, can be achieved by our proposals for the ending of National Service and for organising the defence Forces once more on a professional basis.
We gave definite undertakings to this effect in the Defence White Paper, when we undertook to make life in the Services more attractive. We shall carry out what is said in paragraphs 53 and 54 of that White Paper. I am convinced that our policy is right, both from the point of view of the strategic and tactical needs of the day and in order to provide our industrial economy with more skilled manpower.
Having considered our Estimates, I should like, in the few moments that remain, to examine the estimates of the party opposite. After all, the one difference between our Estimates and their estimates is that ours will not be published for a few weeks, whereas we


have a full opportunity of examining the estimates of right hon. and hon. Gentlemen opposite. I shall be quite impartial in examining their estimates. I propose to call in aid the ex-Financial Secretary, my hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) whom, I know from my own experience, no one will accuse of mathematical inexactitude. We certainly never found him inexact in the examination of our Estimates. This is what my hon. Friend said about the Socialist estimates:
The Socialist policies, at the lowest estimate, would put £1,000 million a year on the Budget and several thousand million pounds of additional Government paper on to the market.
That statement was made in August, 1957.
What are the details of this policy? They are the abolition of the Health Service charges and the increases in contributions, the plan to acquire shares in about 500 large companies, the re-nationalisation of iron and steel and of road haulage and the nationalisation of 5 million houses. Do hon. and right hon. Members opposite really believe that that would be an anti-inflationary policy? This illustrates the absolute insincerity

of the whole of their contributions today.

I assure those who drafted the Socialist Amendment of no confidence that we on this side believe in their capacity to pursue policies which would secure a constant and calamitous fall in the value of the £. That is the policy which right hon. and hon. Members opposite bring before us tonight. Our view is the opposite. It is something which the country should realise in comparing the policies as between us both.

If we are to secure the living of our people and ensure their happiness it is essential to win this round in the battle against inflation. We have to combine two tests: the measure of the load on our resources, with the infinite capacity of the individual human being to give of his or her best if called upon to increase wealth whether at home or overseas. We believe that we have the only opportunity to do that and we therefore ask the House to support us in the Division tonight.

Question put, That the words proposed to be left out stand part of the Question:—

The House divided: Ayes 324, Noes 262.

Division No. 27.]
AYES
[10.0 p.m.


Agnew, Sir Peter
Brooke, Rt. Hon. Henry
Eden, J. B. (Bournemouth, West)


Aitken, W. T.
Brooman-White, R. C.
Elliott,R.W. (N'castle upon Tyne, N.)


Allan, R. A. (Paddington, S.)
Browne, J. Nixon (Craigton)
Emmet, Hon. Mrs. Evelyn


Alport, C. J. M.
Bryan, P.
Errington, Sir Eric


Amery, Julian (Preston, N.)
Bullus, Wing Commander E. E.
Erroll, F. J.


Amory, Rt. Hn. Heathooat (Tiverton)
Burden, F. F. A.
Farey-Jones, F. W.


Anstruther-Gray, Major Sir William
Butcher, Sir Herbert
Fell, A.


Arbuthnot, John
Butler,Rt.Hn.R.A. (Saffron Wa'den)
Finlay, Craeme


Armstrong, C. W.
Campbell, Sir David
Fisher, Nigel


Ashton, H.
Carr, Robert
Fletcher-Cooke, C.


Astor, Hon. J. J.
Cary, Sir Robert
Fort, R.


Atkins, H. E.
Channon, Sir Henry
Fraser, Hon. Hugh (Stone)


Baldock, Lt.-Cmdr. J. M.
Chichester-Clark, R.
Fraser, Sir Ian (M'cmbe &amp; Lonsdale)


Baldwin, A. F.
Clarke, Brig. Terenoe (Portsmth, W.)
Freeth, Denzil


Balniel, Lord
Cole, Norman
Galbraith, Hon. T. G. D.


Barber, Anthony
Conant, Maj. Sir Roger
Gammans, Lady


Barlow, Sir John
Cooke, Robert
Garner-Evans, E. H.


Barter, John
Cooper, A. E.
George, J. C. (Pollok)


Baxter, Sir Beverley
Cordeaux, Lt.-Col. J. K.
Gibson-Watt, D.


Beamish, Col. Tufton
Corfield, Capt. F. V.
Glover, D.


Bell, Philip (Bolton, E.)
Craddock, Beresford (Spelthorne)
Glyn, Col. Richard H.


Bell, Ronald (Bucks, S.)
Crosthwaite-Eyre, Col. O. E.
Godber, J. B.


Bennett, Dr. Reginald
Crowder, Sir John (Finchley)
Gomme-Duncan, Col. Sir Alan


Bevins, J. R. (Toxteth)
Crowder, Petre (Ruislip—Northwood)
Goodhart, Philip


Bidgood, J. C.
Cunningham, Knox
Cough, C. F. H.


Biggs-Davison, J. A.
Dance, J. C. G.
Gower, H. R.


Bingham, R. M.
Davidson, Viscountess
Graham, Sir Fergus


Birch, Rt. Hon. Nigel
D'Avigdor-Goldsmid, Sir Henry
Grant, W. (Woodside)


Bishop, F. P.
Deedes, W. F.
Grant-Ferris. Wg Cdr. R. (Nantwich)


Black, C. W.
Digby, Simon Wingfield
Green, A.


Body, R. F.
Donaldson, Cmdr. C. E. McA.
Gresham Cooke, R.


Boothby, Sir Robert
Doughty, C. J. A.
Grimston, Sir Robert (Westbury)


Bossom, Sir Alfred
Drayson, G. B.
Grosvenor, Lt.-Col. R. G.


Boyd-Carpenter, Rt. Hon. J. A.
du Cann, E. D. L.
Gurden, Harold


Boyle, Sir Edward
Dugdale, Rt. Hn. Sir T. (Richmond)
Hall, John (Wycombe)


Braine, B. R.
Duncan, Sir James
Hare, Rt. Hon. J. H.


Braithwaite, Sir Albert (Harrow, W.)
Duthie, W. S.
Harris, Frederic (Croydon, N.W.)


Bromley-Davenport, Lt.-Col. W. H.
Eccles, Rt. Hon. Sir David





Harris, Reader (Heston)
Lloyd, Rt. Hon. Selwyn (Wirral)
Remnant, Hon. P.


Harrison, A. B. C. (Maldon)
Longden, Gilbert
Renton, D. L. M.


Harrison, Col. J. H. (Eye)
Low, Rt. Hon. Sir Toby
Ridsdale, J. E.


Harvey, Sir Arthur Vere (Macclesf'd)
Lucas, Sir Jocelyn (Portsmouth, S.)
Rippon, A. G. F.


Harvey, Ian (Harrow, E.)
Lucas, P. B. (Brentford &amp; Chiswick)
Roberts, Sir Peter (Heeley)


Harvey, John (Walthamstow, E.)
Lucas-Tooth, Sir Hugh
Robertson, Sir David


Harvie-Watt, Sir George
McAdden, S. J.
Robinson, Sir Roland(Blackpool, S.)


Hay, John
Macdonald, Sir Peter
Robson Brown, Sir William


Head, Rt. Hon. A. H.
Mackeson, Brig. Sir Harry
Rodgers, John (Sevenoaks)


Heald, Rt. Hon. Sir Lionel
Mckibbin, Alan
Roper, Sir Harold


Henderson, John (Cathcart)
Mackie, J. H. (Galloway)
Ropner, Col. Sir Leonard


Henderson-Stewart, Sir James
McLaughlin, Mrs. P.
Russell, R. S.


Hesketh, R. F.
Maclay, Rt. Hon. John
Sandys, Rt. Hon. D.


Hicks-Beach, Maj. W. W.
Maclean, Sir Fitzroy (Lancaster)
Scott-Miller, Cmdr. R.


Hill, Rt. Hon. Charles (Luton)
McLean, Neil (Inverness)
Sharples, R. C.


Hill, Mrs. E. (Wythenshawe)
Macleod, Rt. Hn. Iain (Enfield, W.)
Shepherd, William


Hill, John (S. Norfolk)
Macleod, John (Ross &amp; Cromarty)
Simon, J. E. S. (Middlesbrough, W.)


Hinchingbrooke, Viscount
Macmillan, Maurice (Halifax)
Smithers, Peter (Winchester)


Hirst, Geoffrey
Macpherson, Niall (Dumfries)
Smyth, Brig. Sir John (Norwood)


Hobson,John(Warwick &amp; Leam'gt'n)
Maddan, Martin
Soames, Christopher


Holland-Martin, C. J.
Maitland, Cdr. J. F. W. (Horncastle)
Spearman, Sir Alexander


Hope, Lord John
Maitland, Hon. Patrick (Lanark)
Speir, R. M.


Hornby, R. P.
Manningham-Buller, Rt. Hn. Sir R.
Spence, H. R. (Aberdeen, W.)


Hornsby-Smith, Miss M. P.
Markham, Major Sir Frank
Spens, Rt. Hn. Sir P. (Kene'gt'n, S.)


Horobin, Sir Ian
Marlowe, A. A. H.
Stanley, Capt. Hon. Richard


Horsbrugh, Rt. Hon. Dame Florence
Marples, Rt. Hon. A. E.
Stevens, Geoffrey


Howard, Gerald (Cambridgeshire)
Marshall, Douglas
Steward, Harold (Stockport, S.)


Howard, Hon. Greville (St. Ives)
Mathew, R.
Steward, Sir William (Woolwich, W.)


Howard, John (Test)
Maude, Angus
Stoddart-Scott, Col. Sir Malcolm


Hughes Hallett, Vice-Admiral J
Maudling, Rt. Hon. R.
Storey, S.


Hughes-Young, M. H. C.
Mawby, R. L.
Stuart, Rt. Hon. James (Moray)


Hulbert, Sir Norman
Maydon, Lt.-Comdr. S. L. C.
Studholme, Sir Henry


Hutchison, Michael Clark (E'b'gh, S.)
Medlicott, Sir Frank
Summers, Sir Spencer


Hutchison, Sir Ian Clark (E'b'gh, W.)
Milligan, Rt. Hon. W. R.
Sumner, W. D. M. (Orpington)


Hutchison, Sir James (Scotstoun)
Molson, Rt. Hon. Hugh
Taylor, Sir Charles (Eastbourne)


Hyde, Montgomery
Moore, Sir Thomas
Taylor, William (Bradford, N.)


Hylton-Foster, Rt. Hon. Sir Harry
Morrison, John (Salisbury)
Teeling, W.


Iremonger, T. L.
Mott-Radclyffe, Sir Charles
Temple, John M.


Irvine, Bryant Godman (Rye)
Nabarro, G. D. N.
Thomas, Leslie (Canterbury)


Jenkins, Robert (Dulwich)
Nairn, D. L. S.
Thomas, P. J. M. (Conway)


Jennings, J. C. (Burton)
Neave, Airey
Thompson, Kenneth (Walton)


Jennings, Sir Roland (Hallam)
Nicholl, Harmar
Thompson, Lt.-Cdr.R. (Croydon, S.)


Johnson, Dr. Donald (Carlisle)
Nicholson, Godfrey (Farnham)
Thorneycroft, Rt. Hon. P.


Johnson, Eric (Blackley)
Nicolson, N. (B'n'm'th, E. &amp; Chr'ch)
Thornton-Kemsley, C. N.


Jones, Rt. Hon. Aubrey (Hall Green)
Noble, Comdr. Rt. Hon. Allan
Tiley, A. (Bradford, W.)


Joseph, Sir Keith
Nugent, G. R. H.
Tilney, John (Wavertree)


Joynson-Hicks, Hon. Sir Lancelot
O'Neill, Hn. Phelim (Co. Antrim, N.)
Turner, H. F. L.


Kaberry, D.
Ormsby-Gore, Rt. Hon. W. D.
Turton, Rt. Hon. R. H.


Keegan, D
Orr, Capt. L. P. S.
Tweedsmuir, Lady


Kerby, Capt. H. B.
Orr-Ewing, Charles Ian (Hendon, N.)
Vane, W. M. F.


Kerr, Sir Hamilton
Orr-Ewing, Sir Ian(Weston-S-Mare)
Vaughan-Morgan, J. K.


Kershaw, J. A.
Osborne, C.
Vickers, Miss Joan


Kimball, M.
Page, R. G.
Vosper, Rt. Hon. D. F.


Kirk, P. M.
Parnell, N. A. (Kirkdale)
Wakefield, Edward (Derbyshire, W.)


Lagden, G. W.
Partridge, E.
Wakefield, Sir Wavell (St. M'lebore)


Lambert, Hon. G.
Peel, W. J.
Walker-Smith, Rt. Hon. Derek


Lambton, Viscount
Peyton, J. W. W.
Wall, Major Patrick


Lancaster, Col. C. C.
Pickthorn, K. W. M.
Ward, Rt. Hon. G. R. (Worcester)


Langford Holt, J. A.
Pike, Miss Mervyn
Ward, Dame Irene (Tynemouth)


Leather, E. H. C.
Pilkington, Capt. R. A.
Watkinson, Rt. Hon. Harold


Leavey, J. A.
Pitman, I. J.
Webbe, Sir H.


Leburn, W. G.
Pitt, Miss E. M.
Whitelaw, W. S. I.


Legge-Bourke, Maj. E. A. H.
Pott, H. P.
Williams, Paul (Sunderland, S.)


Legh, Hon. Peter (Petersfield)
Powell, J. Enoch
Williams, R. Dudley (Exeter)


Lennox-Boyd, Rt. Hon. A. T.
Price, David (Eastleigh)
Wills, G. (Bridgwater)


Lindsay, Hon. James (Devon, N.)
Price, Henry (Lewisham, W.)
Wilson, Geoffrey (Truro)


Lindsay, Martin (Solihull)
Profumo, J. D.
Wood, Hon. R.


Linstead, Sir H. N.
Ramsden, J. E.
Woollam, John Victor


Llewellyn, D. T.
Rawlinson, Peter
Yates, William (The Wrekin)


Lloyd, Rt. Hon. G. (Sutton Coldfield)
Redmayne, M.



Lloyd, Maj. Sir Guy (Renfrew, E.)
Rees-Davies, W. R.
TELLERS FOR THE AYES:




Mr. Heath and Mr. Oakshott.







NOES


Ainsley, J. W.
Hale, Leslie
Neal, Harold (Bolsover)


Albu, A. H.
Hall, Rt. Hn. Glenvil (Colne Valley)
Noel-Baker, Francis (Swindon)


Allaun, Frank (Salford, E.)
Hamilton, W. W.
Noel-Baker, Rt. Hon. P. (Derby, S.)


Allen, Arthur (Bosworth)
Hannan, W.
O'Brien, Sir Thomas


Allen, Scholefield (Crewe)
Harrison, J. (Nottingham, N.)
Oram, A. E.


Anderson, Frank
Hastings, S.
Orbach, M.


Awbery, S. S.
Hayman, F. H.
Oswald, T.


Bacon, Miss Alice
Healey, Denis
Owen, W. J.


Baird, J.
Henderson, Rt. Hn. A. (Rwly Regis)
Padley, W. E.


Bellenger, Rt. Hon. F. J.
Herbison, Miss M.
Paget, R. T.


Bence, C. R. (Dunbartonshire, E.)
Hewitson, Capt. M.
Paling, Rt. Hon. W. (Dearne Valley)


Benn, Hn. Wedgwood (Bristol, S.E.)
Hobson, C. R. (Keighley)
Paling, Will T. (Dewsbury)


Benson, G.
Holman, P.
Palmer, A. M. F.


Bevan, Rt. Hon. A. (Ebbw Vale)
Holmes, Horace
Pannell, Charles (Leeds W.)


Blackburn, F.
Holt, A. F.
Pargiter, G. A.


Blenkinsop, A.
Houghton, Douglas
Parker, J.


Blyton, W. R.
Howell, Charles (Perry Barr)
Parkin, B. T.


Boardman, H.
Howell Denis (All Saints)
Paton, John


Bottomley, Rt. Hon. A. G.
Hoy, J. H.
Peart, T. F.


Bowen, E. R. (Cardigan)
Hubbard, T. F.
Pentland, N.


Bowles, F. G.
Hughes, Cledwyn (Anglesey)
Plummer, Sir Leslie


Boyd, T. C.
Hughes, Emrys (S. Ayrshire)
Popplewell, E.


Braddock, Mrs. Elizabeth
Hughes, Hector (Aberdeen, N.)
Prentice, R. E.


Brockway, A. F.
Hunter, A. E.
Price, J. T. (Westhoughton)


Broughton, Dr. A. D. D.
Hynd, H. (Accrington)
Price, Philips (Glorcestershire, W.)


Brown, Rt. Hon. George (Belper)
Hynd, J. B. (Attercliffe)
Probert, A. R.


Brown, Thomas (Ince)
Irvine, A. J. (Edge Hill)
Proctor, W. T.


Burke, W. A.
Irving, Sydney (Dartford)
Pursey, Cmdr. H.


Burton, Miss F. E.
Isaacs, Rt. Hon. G. A.
Randall, H. E.


Butler, Herbert (Hackney, C.)
Jay, Rt. Hon. D. P. T.
Rankin, John


Butler, Mrs. Joyce (Wood Green)
Jeger, George (Goole)
Redhead, E. C.


Callaghan, L. J.
Jeger, Mrs. Lena(Holbn &amp; St.Pncs.S.)
Reeves, J.


Carmichael, J.
Jenkins, Roy (Stechford)
Reid, William


Champion, A. J.
Johnson, James (Rugby)
Rhodes, H.


Chapman, W. D.
Jones, Rt. Hon. A. Creech (Wakefield)
Robens, Rt. Hon. A.


Chetwynd G. R.
Jones, David (The Hartlepools)
Roberts, Albert (Normanton)


Clunie, J.
Jones, Elwyn (W. Ham, S.)
Roberts, Goronwy (Caernarvon)


Coldrick, W.
Jones, Jack (Rotherham)
Robinson, Kenneth (St. Pancras, N.)


Collick, P. H. (Birkenhead)
Jones, J. Idwal (Wrexham)
Rogers, George (Kensington, N.)


Collins, V.J. (Shoreditch &amp; Finsbury)
Jones, T. W. (Merioneth)
Ross, William


Corbet, Mrs. Freda
Kenyon, C.
Royle, C.


Cove, W. G.
Key, Rt. Hon. C. W.
Shinwell, Rt. Hon. E.


Craddock, George (Bradford, S.)
King, Dr. H. M.
Short, E. W.


Cronin, J. D.
Lawson, G. M.
Shurmer, P. L. E.


Crossman, R. H. S.
Ledger, R. J.
Silverman, Julius (Aston)


Cullen, Mrs. A.
Lee, Frederick (Newton)
Silverman, Sydney (Nelson)


Dalton, Rt. Hon. H.
Lee, Miss Jennie (Cannock)
Simmons, C. J. (Brierley Hill)


Darling, George (Hillsborough)
Lever, Harold (Cheetham)
Skeffington, A. M.


Davies, Ernest (Enfield, E.)
Lever, Leslie (Ardwick)
Slater, Mrs. H. (Stoke, N.)


Davies, Harold (Leek)
Lewis, Arthur
Slater, J. (Sedgefield)


Davies, Stephen (Merthyr)
Lindgren, G. S.
Smith, Ellis (Stoke, S.)


Deer, G.
Lipton, Marcus
Snow, J. W.


de Freitas, Geoffrey
Logan, D. G.
Sorensen, R. W.


Delargy, H. J.
Mabon, Dr. J. Dickson
Soskice, Rt. Hon. Sir Frank


Diamond, John
MacColl, J. E.
Sparks, J. A.


Dodds, N. N.
MacDermot, Niall
Steele, T.


Donnelly, D. L.
McGhee, H. G.
Stewart, Michael (Fulham)


Dye, S.
McGovern, J.
Stones, W. (Consett)


Ede, Rt. Hon. J. C.
McInnes, J.
Strauss, Rt. Hon. George (Vauxhall)


Edelman, M.
McKay, John (Wallsend)
Stross, Dr.Barnett(Stoke-on-Trent, C.)


Edwards, Rt. Hon. John (Brighouse)
McLeavy, Frank
Summerskill, Rt. Hon. E.


Edwards, Rt. Hon. Ness(Caerphilly)
MacMillan, M. K. (Western Isles)
Swingler, S. T.


Edwards, Robert (Bilston)
MacPherson, Malcolm (Stirling)
Sylvester, G. O.


Edwards, W. J. (Stepney)
Mahon, Simon
Taylor, Bernard (Mansfield)


Evans, Albert (Islington, S.W.)
Mainwaring, W. H.
Taylor, John (West Lothian)


Fernyhough, E.
Mallalieu, E. L. (Brigg)
Thomas, George (Cardiff)


Fienburgh, W.
Mallalieu, J. P. W. (Huddersfd, E.)
Thomas, Iorwerth (Rhondda, W.)


Finch, H. J.
Mason, Roy
Thomson, George (Dundee, E.)


Fletcher, Eric
Mayhew, C. P.
Timmons, J.


Fraser, Thomas (Hamilton)
Mellish, R. J.
Tomney, F.


Caitskell, Rt. Hon. H. T. N.
Messer, Sir F.
Ungoed-Thomas, Sir Lynn


George, Lady Megan Lloyd (Car' then)
Mikardo, Ian
Usborne, H. C.


Gibson, C. W.
Mitchison, G. R.
Wade, D. W.


Gooch, E. G.
Monslow, W.
Warbey, W. N.


Cordon Walker, Rt. Hon. P. C.
Moody, A. S.
Watkins, T. E.


Greenwood, Anthony
Morris, Percy (Swansea, W.)
Weitzman, D.


Grenfell, Rt. Hon. D. R.
Morrison, Rt. Hn. Herbert (Lewis'm.S.)
Wells, Percy (Faversham)


Grey, C. F.
Mort, D. L.
Wells, William (Walsall, N.)


Griffiths, Rt. Hon. James (Llanelly)
Moss, R.
West, D. G.


Griffiths, William (Exchange)
Moyle, A.
Wheeldon, W. E.


Grimond, J.
Mulley, F. W.
White, Mrs. Eirene (E. Flint)







White, Henry (Derbyshire, N.E.)
Williams, Ronald (Wigan)
Woodburn, Rt. Hon. A.


Wigg, George
Williams, Rt. Hon. T. (Don Valley)
Woof, R. E.


Wilcock, Group Capt. C. A. B
Williams, W. R. (Openshaw)
Yates, V. (Ladywood)


Wilkins, W. A.
Williams, W. T. (Barons Court)
Younger, Rt. Hon. K.


Willey, Frederick
Willis, Eustace (Edinburgh, E.)
Zilliacus, K.


William, David (Neath)
Wilson, Rt. Hon. Harold (Huyton)



Williams, Rev. Llywetyn (Ab'tillery)
Winter bottom, Richard
TELLERS FOR THE NOES




Mr. Bowden and Mr. Pearson

Main Question put and agreed to.

Resolved,
That this House supports Her Majesty's Government in their resolve to maintain by every effective means the internal and external value of the pound sterling.

NATIONALISED INDUSTRIES

Sir Ian Horobin discharged from the Select Committee; Mr. Fort added.—[Mr. Oakshott.]

NATIONAL HEALTH SERVICE (MULTIPLE PACKS)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Wills.]

10.11 p.m.

Dr. J. Dickson Mabon: I wish to raise the matter of multiple packs particularly in relation to four categories of patients. On 1st December, 1956, the new National Health Service regulations, involving a basic charge of 1s. per item, became operative. In the debate in the House on 29th November, we received assurances on all sides of the House—because this is a matter which concerns hon. Members on all sides—that the effect of the new regulations on the chronic sick would be kept under review by the various Government Departments—the Department of Health for Scotland and the Ministry of Health covering England and Wales.
We were also told that, wherever possible, any further suggestions abut multiple packs—in particular ones made in the debate on 29th November—would be considered. I understand that up to the present time we have seen adopted, or proposed to be adopted, one more new multiple pack and that is concerned with the treatment of boils and carbuncles. I believe that it will come into operation in the spring of this year, but I have no doubt that the Joint Under-Secretary of State for Scotland, who will be replying to this debate tonight, will give us some precise indication.
It is legitimate for hon. Members on both sides of the House to complain about the long delay there has been in giving us some idea of what was happening in relation to multiple packs. Fourteen months is a long time when one considers the effect this is having on quite a number of people who suffer from chronic sicknesses. I personally do not agree with the concept of multiple packs. I think that this idea is not good for the practice of medicine. Clearly, it puts into a strait-jacket the kind of régime which different doctors might wish to apply in varying ways to particular patients. After all, the concept of multiple packs was really a mechanism resorted to by the Government to alleviate the hardship which they feared might fall consequent on the passing of the regulations on 29th November.
I am mentioning in this debate four categories of patients not because they are the only ones embraced in the phrase "chronic sick", but because they represent, fairly I think, the different kinds of sicknesses that have to be looked at in terms of a multiple pack. The common factor about the four kinds of patient which I have mentioned—the diabetic, tubercular, colostomy and cardiac patients, is that they are chronic sick and can reach a state of stabilisation in their régime where they are getting the same drugs and materials for two or three months at a time. That lends itself to the idea that if a quantity is being regularly prescribed and, in medical terms, the patients are stabilised, it may be administratively possible to prescribe for long periods, or for a number of commodities collectively at any one time.
I should like specific answers, if it is possible, about these four categories, because they are varied. I could have mentioned cancer and other diseases, but I have omitted them because of lack of time. For instance, colostomy requires four things. There is, of course, replacement of the colostomy belt, and I have no quarrel with the provisions for that, but a colostomy patient also requires


cotton wool, plastic packs and cellulose wadding. Surely it does not defy our administrative ability here to find a way of securing a multiple pack which would cost 1s. a time instead of, as at present, paying 1s. an item.
Similarly with diabetics. I am told that there are so many kinds of insulin that it becomes difficult to find ways and means of putting them into a multiple pack, but a stabilised diabetic has the same kind of insulin for two or three months. If he breaks down, he naturally returns to his diabetic clinic or to his physician to be reassessed, and if he does not break down he receives the same dosage every day or so and follows the same regime. At present, he has to purchase syringes and needles at 1s., urine testing set for 1s., pays 1s. for cotton wool, 1s. for surgical spirit and 1s. for the insulin, which is not always supplied in large quantities. It would not be desirable to supply it in very large quantities, but a month's supply could be given.
I have asked about tuberculosis specifically because of the Scottish context. I am glad to say that in Scotland we have a very lively campaign at present for picking up tuberculosis contacts. A large number are treated at home and because of that we are having to use three new tuberculosis drugs in very large quantities. In Scotland—it may not be the case in England—it might be feasible to have multiple packs of these drugs, particularly those which are taken orally as distinct from those prescribed for injection.
I have included the last category of cardiacs because I feel that here is a subject which administrative endeavour has left unexplored. There are two kinds of chronic cardiac. Some require a régime of digitalis and a mercurial diuretic. Those two drugs, prescribed regularly, might be given in a multiple pack.
In the debate to which I have referred, my hon. Friend the Member for Kirkcaldy Burghs (Mr. Hubbard), who has suffered from coronary thrombosis, outlined the six drugs which I know he takes regularly and which fend off any future attack which might occur. In a most interesting speech, he discussed diabetes in the same context, because he is also a diabetes sufferer. I can confirm that he takes the six drugs he mentioned. There must be a number of people with

coronary thrombosis, which is so widespread that it would be very important for them to have multiple packs.
I began by saying that I do not agree with multiple packs, but the point of it all is that the premise upon which we have to have multiple packs is one that was offered to us by the Government. I do not want to quarrel with the idea, because I wish to hear what the Government have to say in relation to these four categories, but if we are to have multiple packs or some other form of removing the hardships consequent on the passing of the regulations fourteen months ago, may not some other suggestion be considered?
I should like to put forward two possible alternatives to help the Government, which, at the same time, might possibly meet the difficulties arising in the cases of the chronic sick. Is it not possible for the Department and the Ministry to lay down a rule that doctors can prepare a multiple pack from lists of variants? That is to say, that the doctor will have a list of the commodities which he is able to prescribe, and the various items could, in effect, be prescribed as a multiple pack. All the patient would have to do would be to go to the chemist, who would have all the items listed on the form E.C.10, and be able to work out the permutation of the permitted items.
There is a host of such variations, and I think it is well worth while looking at whatever administrative difficulties there may he so that a doctor should he allowed, from the list of drugs, bandages, and so on, to prescribe them in a certain series which will be considered by the Department and the Ministry to be, in effect, a multiple pack. From the point of view of the chemist, there should be no difficulty, because the chemist will be taking these items from the stock in his shop. May I make another suggestion?
Would it be possible for the Department to think about the position where a doctor could certify that a patient is a chronically sick patient, and that he will be for the next two or three months on a certain régime of medicine and materials? The doctor could so certify that, and the certificate could be sent to the National Health Service executive committee, which would issue a registration card to the patient showing that he


is chronically sick and giving him a number. This would be marked on the form E.C.10, so that the prescriptions regularly given by the doctor will clear him of any charge, or, at any rate, make him eligible only for the charge of 1s.?
I do not know whether these suggestions are particularly good, but I certainly would like to think that something like that was being considered. Either the Government are sincere in trying to get the multiple pack or some other system in operation to relieve hardship or they are not, and I should like to believe that they are genuinely trying to find a way out of the difficulty. If it is true that there is a difficulty in getting the medical profession, through the British Medical Association, to agree—though it is difficult to get agreement here, and I can quite understand why that is so—surely it is not impossible for the Department to suggest other solutions which might find acceptance with medical people.
The whole idea of this multiple pack and of the regulations concerning it which caused this development to emerge, was economy. While I do not have with me the figures for Scotland and Wales tonight, and I regret this, I have the figures for England in relation to comparable periods of nine months in 1956 and nine months of 1957 up to September. The period of nine months in 1956 was free of the charge and only carried the single 1s. charge, but the period of nine months in 1957 carried the charge of 1s. per item.
It is interesting to look at the figures for England. I do not think that England will necessarily be a bad reflection of performance in Scotland, although that may be a point of comment. I am prepared to accept the fact that England is a mirror of reflection of performance in the whole of Great Britain in this matter. The Minister may say, "This system and these regulations have reduced the total number of prescriptions from 160 million in the nine-months' period of 1956 to 139 million in the comparable nine months of 1957." That would be a legitimate point for the Minister to make.
But if he takes the real figure—and the Health Departments must know that this is true—he will find that the average total cost of each prescription for the two nine months' periods are 55·96d. and 70·16d.

respectively for 1956 and 1957. That shows a substantial increase in the actual cost of the prescription. In other words, we are not defeating the rising costs of prescriptions in the National Health Service, which was what the Government intended to do. I am at one in this respect with the Government; I think that we can make an earnest effort to delimit the cost of drugs in the National Health Service.
I think that there is a great deal of hidden abuse, but it is not at the patients' end, nor do I think that these are difficulties which doctors experience because of a voluntary non-salaried service. I believe that the weaknesses lie within the operations of the drug companies. The waste in the field of competitive research is terrific, as is the advertising. That is what the Government should tackle. I do not want to raise the general context of the whole matter, although I have to do so to some extent to provide the background for the debate. I am interested to know—as are many of the chronically sick—what has happened about the multiple packs that were going to be made available under this or some other system.

10.27 p.m.

Dr. Edith Summerskill: I should like to emphasise the importance of this matter. Like my hon. Friend the Member for Greenock (Dr. Dickson Mabon). I cannot understand the delay. I raised this matter months ago. This is a plea on behalf of some of the most tragic patients in the country—people suffering from diseases which must necessarily shorten their expectation of life. Consequently, they are just the people who cannot wait. Yet, although the Government have had this matter brought to their attention time after time—not only the Joint Under-Secretary, who is new here, but previous Ministers of Health—and although we have been given a half-promise, still nothing is done. I should like the Minister to tell us why there has been this delay, and when we may expect action to be taken.

10.28 p.m.

The Joint Under-Secretary of State for Scotland (Mr. J. Nixon Browne): I am grateful to the hon. Member for Greenock (Dr. Dickson Mabon) for providing this opportunity to discuss the question of packs for colostomy, diabetic, tuberculosis


and cardiac patients, with whom we all have great sympathy. At the start I should like to make it clear that there is no question of these patients not having prescribed for them the medicines and equipment that they need. The doctor can and does prescribe all that they require. The question of packs concerns rather the 1s. charges that the patient has to pay: if what he needs is prescribed as a series of single items then he has to pay 1s. for each: if they are included in a multiple pack they are prescribed as one item and only 1s. is, is payable.
On the general question of the 1s. charge the justification for that was, as the hon. Member will remember, very fully debated in November, 1956, when the Regulations concerned were before this House. In our view these 1s. charges, together with the arrangements—which are very important—for refund in needy cases, represent a reasonable way of obtaining a contribution from patients who benefit; a contribution which goes some way to meeting the rising cost of the drug bill, about which we are all so concerned.
At the time the charges were introduced in December, 1956 ten multiple packs were already on the market and we provided for these composite packs being charged at 1s. each. Therefore it is not correct to say as the hon. Gentleman says that these multiple packs were devised as a consequence of the change to the 1s. charge per item.

Dr. Dickson Mabon: All these multiple packs are really dressings. They do not face up to any disease. They are really surgical dressings.

Mr. Browne: I am simply saying that they were not devised as a consequence of the 1s. per item charge.
Examples of these packs are the syringe and spare needles for diabetics, the vaporiser set for bronchitis patients and the multiple pack dressings for minor wounds.
My right hon. Friend the Member far Thirsk and Malton (Mr. Turton) who was then Minister of Health said:
The conditions governing the creation of multiple packs are that the articles must be frequently prescribed at the same time and sufficiently often prescribed to make it worth

while for the manufacturers to make up the packs."—[OFFICIAL REPORT, 29th November, 1956; Vol. 561, c. 716–7.]
He also said that the British Medical Association had been asked whether it could suggest any further multiple packs, and that if any were suggested he would at once approach the manufacturers.
The Health Departments have since been trying to devise further packs for chronic sick patients and in this they have had the help of the British Medical Association which, I believe, consulted some of the local medical committees. Since my right hon. Friend made this promise, this question of multiple packs has been constantly under examination by the Health Departments and the General Medical Services Committee of the British Medical Association.
These discussions have been conducted on a Great Britain basis, because the needs of the patients are, of course, the same in both countries, and, indeed, the vast majority of the manufacturers in the pharmaceutical industry, who are closely concerned, are domiciled in England. The only new pack that we have been able to devise that would seem likely to benefit a sufficient number of patients to make its production useful is a larger pack of dressings for general use; and this proposal is at present before the manufacturers who are considering the production arrangements.
I cannot give the hon. Member the exact date when we hope to have it, but we hope it will be in chemists' shops within eight or twelve weeks' time. We are disappointed that it was not found possible to devise new packs for the types of patients the hon. Member has mentioned, but I am sure it was right to persevere with the examination of possibilities, rather than dismiss the task at an earlier stage. The British Medical Association which, indeed, originally suggested the possibility of further packs for colostomy, diabetic and tuberculosis patients, has shared with us in our efforts and in our disappointment.
The main difficulty is the varied needs of different patients. Before a pack can usefully be manufactured and marketed, it must be established that the standard contents will be suitable for a reasonably large number of patients, otherwise it would be impossible for the manufacturer to support its production and the


packs would lie unused either on his shelves or on the chemist's. It is, of course, in the manufacturer's own interest to produce an acceptable pack. The hon. Member will appreciate that it would not be any convenience to the patient to be given a standard pack in which there was more of one item than he needed and not sufficient of another. The patient would, I am sure, much rather have the items he needed precisely prescribed for him separately, rather than be given a standard pack which did not really meet his particular needs.
Perhaps it would be helpful if I mention the suggestions for new packs which have been carefully considered, but which have not been found practicable. First of all, for colostomy patients there is already available a multiple pack—a colostomy replacement set—so that the patient can obtain for 1s. the replacement of all or any of the various pieces of apparatus which he requires.
We have considered the possibility of devising a special dressings pack for these patients. It seems, however, that the types of dressings required for different colostomy patients do not fall into one pattern on which a useful pack could be based. These patients need different types of dressings in different quantities to suit their particular conditions. This is indeed a matter on which doctors themselves have individual preferences.
The diabetic patient needs a syringe, needles, a urine sugar analysis set, supplies of insulin, spirit, wool and reagent. Two packs have already been produced for diabetic patients, one containing the components of the urine sugar analysis set that they must have, and the other containing a syringe and needles. Each of these packs attracts only the 1s. charge.
We have tried to devise a pack containing insulin, wool and so on, but the fundamental difficulties are, first, that insulin has to be stored in proper conditions, either in the factory or the pharmacy, and, perhaps more important, that diabetic patients have widely varying needs for different types and strengths of insulin. The hon. Member will, I am sure, appreciate these difficulties even better than I can—in fact he mentioned them—and will know that there are no less than seven different types of insulin, each available in different strengths.
For tuberculosis patients, the possibility of a pack containing quantities of the anti-tuberculosis drugs was considered. Once again, when the prescriptions were examined, they did not seem to indicate a sufficiently common requirement on which to construct a pack that would be a practical proposition for patients and manufacturers.
I must say quite frankly that we have not considered, so far, any suggestion for a multiple pack for cardiac patients. But we shall certainly consider carefully the suggestions which the hon. Member has made. I am grateful to him for them, although I am sure he would not expect me to comment learnedly at this stage.
I can assure the hon. Member, and the House, that the Health Ministers and the British Medical Association will be only too willing to consider any suggestions for further packs for chronic sick patients that may be put forward from any quarter. None of us wishes to add unduly to the burdens of these unfortunate people; we all have the greatest sympathy for them and we would all, I know, do all we could to help. I know that, to help them, doctors have been prescribing larger quantities of medicines and dressings at a time than formerly they used to do, because this reduces the 1s. charges payable by these patients over a period. This is another way of helping them, and it does not, of course, increase, overall, the amount of any drug or dressing required by the patient.
I wish to explain quite clearly that this is not overprescribing. The quantity prescribed depends on the judgment of the doctor. He will know the largest quantity that can safely be given without any wastage resulting, and without deterioration of the drug itself. The hon. Member will, I am sure, know, that to make it possible for doctors to prescribe larger quantities of drugs and dressings especially for the benefit of chronic sick people my right hon. Friend the Secretary of State, in the regulations which introduced the current charges, specifically provided that any quantity of the same drug, even if it is supplied in a number of saparate containers, would attract one single 1s. charge only.
Lastly, the hon. Member spoke of hardships, and, of course, it is idle to deny that any charge, however light, must create some hardship to someone,


but I think it is wise to conclude by looking very shortly at the extent of the hardship. Since 1st December, 1956, when the current charge of 1s. per item was introduced, a total of about 60 representations or complaints of hardship have reached the Scottish Office. In the same period about 19 million prescriptions, covering about 24 million separate items, have been dispensed. Medical officers in my Department have regular contacts with family doctors, when one would expect cases of hardship, if they occurred at all frequently, would be mentioned. No mention has, in fact, been made of such cases at these routine visits, which would suggest that they must be exceptional occurrences.
That general picture is in line with another set of facts. During the whole

of 1957, which included the heavy influenza epidemic of last autumn, only 2,500 people in Scotland, apart from those already in receipt of National Assistance, found it necessary to seek a refund of their prescription charges from the National Assistance Board, a refund which amounted, in all, to between £700 and £800.
The hon. Member has done a great service in raising this important question and in giving us valuable ideas, which, can assure him, will be considered, and in giving me this opportunity to tell him, the right hon. Lady and the House exactly what the present position is.

Question put and agreed to.

Adjourned accordingly at nineteen minutes to Eleven o'clock.